Union of India v. Rajendra N. Shah and Another
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 t he 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.
475
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 t o 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 forma tion,
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
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
List II—State List
xxx xxx xxx
32. Incorporation, regulation and winding up of corporations, other
than those specified in List I, and universities; unincorpora ted
trading, literary, scientific, religious and other soc ieties 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 C onstitution 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 Co-operative 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 was, therefore, resolved a high power committee would be
constituted by the Central Government consisting of
representatives of the State governments, concerned Minis tries
of the central government, eminent cooperators and other public
officials to review the achievements during the last 100 years and
challenges before it and to suggest ways and means to face them
and to give a new direction to movement. The constitution of the
Committee and terms of reference are to be decided by the Central
Government.”
5. Pursuant to these minutes, and after various consultations by
the Centre with the State Governments, the Constitution (Ninety Seventh
Amendment) Act, 2011 was passed. The Statement of Ob jects and
Reasons for the aforesaid Constitution Amendment is important and is
set out hereunder:
477
“STATEMENT OF OBJECTS AND REASONS
The co-operative sector, over the years, has made significa nt
contribution to various sectors of national economy an d has
achieved voluminous growth. However, it has shown weaknesses
in safeguarding the interests of the members and fulfillm ent of
objects for which these institutions were organised. There have
been instances where elections have been postponed indefinitely
and nominated office bearers or administrators remaining in-charge
of these institutions for a long time. This reduces the accountability
of the management of co-operative societies to their mem bers.
Inadequate professionalism in management in many of the co-
operative institutions has led to poor services and low productivity.
Co-operatives need to run on well established democratic principles
and elections held on time and in a free and fair manner. Therefore,
there is a need to initiate fundamental reforms to revitalize these
institutions in order to ensure their contribution in the economic
development of the country and to serve the interests of members
and public at large and also to ensure their autonomy, democratic
functioning and professional management.
2. The “co-operative societies” is a subject enumerated in Entry
32 of the State List of the Seventh Schedule of the Constitution
and the State Legislatures have accordingly enacted legislations
on co-operative societies. Within the framework of State Acts,
growth of co-operatives on large scale was envisaged as part of
the efforts for securing social and economic justice and equitable
distribution of the fruits of development. It has, however, be en
experienced that in spite of considerable expansion of co-
operatives, their performance in qualitative terms has not been up
to the desired level. Considering the need for reforms in the Co-
operative Societies Acts of the States, consultations with the State
Governments have been held at several occasions and in the
conferences of State Co-operative Ministers. A strong need has
been felt for amending the Constitution so as to keep the co-
operatives free from unnecessary outside interferences and a lso
to ensure, their autonomous organisational set up an d their
democratic functioning.
3. The Central Government is committed to ensure that the co-
operative societies in the country function in a demo cratic,
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
professional, autonomous and economically sound manner. With
a view to bring the necessary reforms, it is proposed to incorporate
a new Part in the Constitution so- as to provide for cer tain
provisions covering the vital. aspects of working of co-operative
societies like democratic, autonomous and professional functioning.
A new article is also proposed to be inserted in Part IV of the
Constitution (Directive Principles of State Policy) for the States
to endeavor to promote voluntary formation, autonom ous
functioning, democratic control and professional management of
cooperative societies. The proposed new Part in the Constitution,
inter alia, seeks to empower the Parliament in respect of multi-
State co-operative societies and the State Legislatures in case of
other co-operative societies to make appropriate law, laying down
the following matters, namely:-
(a) provisions for incorporation, regulation arid winding up of
co-operative societies based on the principles of democ ratic
member-control, member-economic participation and
autonomous functioning;
(b) specifying the maximum number of directors of a co -
operative society to be not exceeding twenty-one members;
(c) providing for a fixed term of five years from the date of
election in respect of the elected members of the board and its
office bearers;
(d) providing for a maximum time limit of six months during
which a board of directors of co-operative society could be
kept under supersession or suspension;
(e) providing for independent professional audit;
(f) providing for right of information to the members of the co-
operative societies;
(g) empowering the State Governments to obtain periodic
reports of activities and accounts of co-operative societies;
(h) providing for the reservation of one seat for the Scheduled
Castes or the Scheduled Tribes and two seats for women on
the board of every co-operative society, which have individuals
as members from such categories;
479
(i) providing for offences relating to co-operative societies and
penalties in respect of such offences.
4. It is expected that these provisions will not only ens ure the
autonomous and democratic functioning of co-operatives, but also
ensure the accountability of management to the members and
other stakeholders and shall provide for deterrence for violation
of the provisions of the law.
5. The Bill seeks to achieve the above objectives.”
(Emphasis supplied)
6. A new Part IXB was then inserted as follows:
PART IXB
THE CO-OPERATIVE SOCIETIES
243ZH. Definitions. —
In this Part, unless the context otherwise requires,—
(a) “authorised person” means a person referred to as such i n
article 243ZQ;
(b) “board” means the board of directors or the governing b ody
of a co-operative society, by whatever name called, to which the
direction and control of the management of the affairs of a society
is entrusted to;
(c) “co-operative society” means a society registered or deemed
to be registered under any law relating to co-operative soci eties
for the time being in force in any State;
(d) “multi-State co-operative society” means a society with objects
not confined to one State and registered or deemed to be registered
under any law for the time being in force relating to such
cooperatives;
(e) “Office bearer” means a President, Vice-Preside nt,
Chairperson, Vice-Chairperson, Secretary or Treasurer, of a co-
operative society and includes any other person to be elected by
the board of any co-operative society;
(f) “Registrar” means the Central Registrar appointed by the
Central Government in relation to the multi-State co-operativ e
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
societies and the Registrar for co-operative societies appointed
by the State Government under the law made by the Legislature
of a State in relation to co-operative societies;
(g) “State Act” means any law made by the Legislature of a
State;
(h) “State level co-operative society” means a co-operative society
having its area of operation extending to the whole of a State and
defined as such in any law made by the Legislature of a State.
243ZI. Incorporation of co-operative societies . —
Subject to the provisions of this Part, the Legislature of a State
may, by law, make provisions with respect to the incorporation,
regulation and winding up of co-operative societies based on the
principles of voluntary formation, democratic member-control,
member-economic participation and autonomous functioning.
243ZJ. Number and term of members of board and its office
bearers. —
(1) The board shall consist of such number of directors as may be
provided by the Legislature of a State, by law:
Provided that the maximum number of directors of a co-operative
society shall not exceed twenty-one:
Provided further that the Legislature of a State shall, by law, provide
for the reservation of one seat for the Scheduled Castes or the
Scheduled Tribes and two seats for women on board of every co-
operative society consisting of individuals as members and having
members from such class of category of persons.
(2) The term of office of elected members of the board and its
office bearers shall be five years from the date of elec tion and
the term of office bearers shall be coterminous with the t erm of
the board:
Provided that the board may fill a casual vacancy on the board by
nomination out of the same class of members in respect of which
the casual vacancy has arisen, if the term of office of the board is
less than half of its original term.
(3) The Legislature of a State shall, by law, make provisions for
co-option of persons to be members of the board having experience
481
in the field of banking, management, finance or specialisation in
any other field relating to the objects and activities undertaken by
the co-operative society, as members of the board of such society:
Provided that the number of such co-opted members shall not
exceed two in addition to twenty-one directors specified in the
first proviso to clause (1):
Provided further that such co-opted members shall not have the
right to vote in any election of the cooperative society in t heir
capacity as such member or to be eligible to be elected as office
bearers of the board:
Provided also that the functional directors of a co-operative society
shall also be the members of the board and such members shall
be excluded for the purpose of counting the total number of
directors specified in the first proviso to clause (1).
243ZK. Election of members of board . —
(1) Notwithstanding anything contained in any law made by the
Legislature of a State, the election of a board shall be conducted
before the expiry of the term of the board so as to ensure that the
newly elected members of the board assume office immediately
on the expiry of the term of the office of members of the outgoing
board. (2) The superintendence, direction and control of the
preparation of electoral rolls for, and the conduct of, all elections
to a co-operative society shall vest in such an authority or body,
as may be provided by the Legislature of a State, by law: Provided
that the Legislature of a State may, by law, provide for the
procedure and guidelines for the conduct of such elections.
243ZL. Supersession and suspension of board and interim
management. —
(1) Notwithstanding anything contained in any law for the t ime
being in force, no board shall be superseded or kept under
supersession for a period exceeding six months:
Provided that the board may be superseded or kept u nder
suspension in a case—
(i) of its persistent default; or
(ii) of negligence in the performance of its duties; or
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
(iii) the board has committed any act prejudicial to the interests
of the co-operative society or its members; or
(iv) there is stalemate in the constitution or functions of the
board; or
(v) the authority or body as provided by the Legislature of a
State, by law, under clause (2) of article 243ZK, has failed to
conduct elections in accordance with the provisions of the State
Act:
Provided further that the board of any such co-operative society
shall not be superseded or kept under suspension where there is
no Government shareholding or loan or financial assistance or
any guarantee by the Government:
Provided also that in case of a co-operative society ca rrying on
the business of banking, the provisions of the Banking Regulation
Act, 1949 shall also apply:
Provided also that in case of a co-operative society, other than a
multi- State co-operative society, carrying on the business of
banking, the provisions of this clause shall have the effect as if for
the words “six months”, the words “one year” had been substituted.
(2) In case of supersession of a board, the administrator appointed
to manage the affairs of such cooperative society shall arrange
for conduct of elections within the period specified in clause (1)
and hand over the management to the elected board.
(3) The Legislature of a State may, by law, make provisions for
the conditions of service of the administrator.
243ZM. Audit of accounts of co-operative societies . —
(1) The Legislature of a State may, by law, make provisions with
respect to the maintenance of accounts by the co-op erative
societies and the auditing of such accounts at least once in each
financial year.
(2) The Legislature of a State shall, by law, lay down the minimum
qualifications and experience of auditors and auditing firms that
shall be eligible for auditing accounts of the co-operative societies.
(3) Every co-operative society shall cause to be audited by an
auditor or auditing firms referred to in clause (2) appointed by the
general body of the co-operative society:
483
Provided that such auditors or auditing firms shall be appointed
from a panel approved by a State Government or an authority
authorised by the State Government in this behalf.
(4) The accounts of every co-operative society shall be audited
within six months of the close of the financial year to which such
accounts relate.
(5) The audit report of the accounts of an apex co-operat ive
society, as may be defined by the State Act, shall be laid before
the State Legislature in the manner, as may be provided by the
State Legislature, by law.
243ZN. Convening of general body meetings . —
The Legislature of a State may, by law, make provisions that the
annual general body meeting of every co-operative society shall
be convened within a period of six months of close of the financial
year to transact the business as may be provided in such law.
243ZO. Right of a member to get information . —
(1) The Legislature of a State may, by law, provide for access to
every member of a co-operative society to the books, information
and accounts of the cooperative society kept in regular transaction
of its business with such members.
(2) The Legislature of a State may, by law, make provis ions to
ensure the participation of members of the management of the
co-operative society providing minimum requirement of attending
meetings by the members and utilising the minimum level of
services as may be provided in such law.
(3) The Legislature of a State may, by law, provide for co-operative
education and training for its members.
243ZP. Returns. —
(1) Every co-operative society shall file returns, within six months
of the close of every financial year, to the authority designated by
the State Government including the following matters, namely: —
(a) annual report of its activities;
(b) its audited statement of accounts;
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
(c) plan for surplus disposal as approved by the general body
of the co-operative society;
(d) list of amendments to the bye-laws of the co-operative
society, if any;
(e) declaration regarding date of holding of its general bo dy
meeting and conduct of elections when due; and
(f) any other information required by the Registrar in pursuance
of any of the provisions of the State Act.
243ZQ. Offences and penalties . —
(1) The Legislature of a State may, by law, make provisions for
the offences relating to the co-operative societies a nd penalties
for such offences.
(2) A law made by the Legislature of a State under cla use (1)
shall include the commission of the following act or omission as
offences, namely:—
(a) a co-operative society or an officer or member ther eof
wilfully makes a false return or furnishes false information, or
any person wilfully not furnishes any information required from
him by a person authorised in this behalf under the provisions
of the State Act;
(b) any person wilfully or without any reasonable excus e
disobeys any summons, requisition or lawful written order issued
under the provisions of the State Act;
(c) any employer who, without sufficient cause, fails to pay to
a co-operative society amount deducted by him from its
employee within a period of fourteen days from the date on
which such deduction is made;
(d) any officer or custodian who wilfully fails to handover
custody of books, accounts, documents, records, cash, security
and other property belonging to a co-operative society of which
he is an officer or custodian, to an authorised person; and
(e) whoever, before, during or after the election of membe rs
of the board or office bearers, adopts any corrupt practice .
485
243ZR. Application to multi-State co-operative societies .—
The provisions of this Part shall apply to the multi-St ate co-
operative societies subject to the modification that any reference
to “Legislature of a State”, “State Act” or State Gover nment”
shall be construed as a reference to “Parliament”, “Central Act”
or “the Central Government” respectively.
243ZS. Application to Union territories . —
The provisions of this Part shall apply to the Union territories and
shall, in their application to a Union territory, having no Legislative
Assembly as if the references to the Legislature of a S tate were
a reference to the administrator thereof appointed under ar ticle
239 and, in relation to a Union territory having a Legisla tive
Assembly, to that Legislative Assembly:
Provided that the President may, by notification in the Off icial
Gazette, direct that the provisions of this Part shall not a pply to
any Union territory or part thereof as he may specify in the
notification.
243ZT. Continuance of existing laws .—
Notwithstanding anything in this Part, any provision of any law
relating to co-operative societies in force in a State immediately
before the commencement of the Constitution (Ninety-seventh
Amendment) Act, 2011, which is inconsistent with the provisions
of this Part, shall continue to be in force until amended or repealed
by a competent Legislature or other competent authority or until
the expiration of one year from such commencement, whichever
is less.]
7. As stated hereinabove, in the public interest, a Writ Pe tition
being WP No. 166 of 2012 filed before the Gujarat High Court succeeded
vide the impugned judgment dated 22.04.2013, by which Part IXB was
declared to be ultra vires for want of ratification by the State Legislatures
under Article 368(2) proviso.
8. Shri K.K. Venugopal, the learned Attorney General for India,
has submitted, relying upon the Statement of Objects and Reasons, that
the Constitution 97th Amendment Act sought to achieve vital social and
economic objectives in regard to the functioning of co-operative societies
in India, which is a sector that has made a significant contribution to the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
economy of the nation. He referred to and relied upon Article 243ZR to
state that, in reality, Part IXB is in two separate parts – one dealing with
multi-State co-operative societies which have ramifications beyond merely
one State, and co-operative societies which exist and oper ate within a
particular state. He argued that even though there was no chall enge
insofar as multi-State co-operative societies were concerned, the entirety
of Part IXB has been struck down, throwing out the baby with the bath
water. The same is true for Part IXB as applicable to Union territories
which is clear from a reading of Article 243ZS. He then argued that as
many as 17 out of 28 States have, after the 97th Amendment, alr eady
enacted legislative measures in conformity with Part IXB and that
therefore more than half of the States had, in effect, accepted and applied
the provisions of Part IXB. What is also of significanc e is that the
Constitution 97th Amendment was preceded by a detailed consultation
with the State Governments as a result of which no State G overnment
has come forward to challenge the same. The learned Attorney General,
on a reading of several judgments of this Court dealing with ratification
of constitutional amendments, argued that there is no change eith er
directly or in effect to Article 246(3) of the Constitution of India, from
which the legislative power of the States contained in List II of the 7th
Schedule flows, or in Entry 32 of List II of the 7th Schedule. In point of
fact, a reading of Part IXB would show that no additional legi slative
power has been given to the Union. All subject matters r elating to co-
operative societies fall solely within the legislative domain of the States.
Apart from reading out passages in Sankari Prasad Singh Deo v. Union
of India, 1952 SCR 89;Sajjan Singh v. State of Rajasthan, (1965) 1
SCR 933 and Kihoto Hollohan v. Zachillhu , 1992 Supp (2) SCC
651, the learned Attorney General relied strongly upon observations in
the dissenting judgments of Wanchoo, J. Ramaswamy, J. and Bachawat,
J. in Golak Nath v. State of Punjab, (1967) 2 SCR 762. According to
him, the examples given by Wanchoo, J. are apposite. On the oth er
hand, Kihoto Hollohan’s case (supra) is distinguishable in that, para 7
of the 10th Schedule of the Constitution had the direct effect of curtailing
the operation of Articles 136, 226 and 227 of the Constitution and, by
barring the jurisdiction of all courts including the Supreme Court and the
High Courts, in regard to all matters covered by the 10th Schedule, this
Court held that ratification would be necessary. The learned Attorney
General then argued that the additional finding of the Divis ion Bench
that the Constitutional Amendment violated the basic structure of the
487
Constitution, in that it tinkered with the federal structure of the Constitution,
was wholly uncalled for and unwarranted inasmuch as the real issue in
this case is one and one only, as to whether ratification is or is not
necessary. If it be held that ratification is necessary, then it is unnecessary
to fall back upon basic structure. Likewise, if it is held that ratification
would not be necessary, then the Constitutional Amendment, which in
fact strengthens the basic structure of the Constitution in s treamlining
the co-operative movement, would belie the finding of the High Court.
9. He also argued that if the doctrine of severability is to be applied,
then in the event of this Court finding that State co-operative societies
cannot be impacted without following ratification, multi-State co-operative
societies, which have ramifications beyond one state can be held to be
covered by Part IXB, as would Union territories, and that on a pplying
the aforesaid doctrine, Part IXB ought to be upheld, at least insofar as
the multi-State co-operative societies are concerned. H e has cited a
number of judgments to buttress his submissions which will be reflected
in this judgment.
10. Shri Prakash Jani, learned senior advocate appearing on behalf
of the Mehsana District Co-operative Milk Producers Unio n in Civil
Appeal No. 282 of 2020 supported the arguments of the learned Attorney
General. In addition, he argued that it must never be forgotten that while
inserting Part IXB into the Constitution of India, Parliament has exercised
its ‘constituent’ power and not ‘legislative’ power. Read wi th Article
245 of the Constitution of India, it would then be clear that s ince the
legislative power of the States in Article 246(3) is subject to the provisions
of the Constitution of India, the legislative head ‘co-operative societies’
contained in Entry 32, List II of the 7 th Schedule is now being made
subject to Part IXB which is a part of the Constitution of India. He
argued that Parliament in its constituent capacity can deal w ith State
subjects, and relied upon the insertion of Article 21A by Co nstitution
(Eighty Sixth Amendment) Act, 2002. He then argued that as a matter
of fact, Part IXB read with Article 43B enhances the basic structure of
the Constitution and relied strongly upon the judgment in Vipulbhai M.
Chaudhary v. Gujarat Coop. Milk Mktg. Federation Ltd. , (2015) 8
SCC 1 to demonstrate that this judgment, though not dealing with t he
constitutional validity of the 97th Amendment, yet held that the said
Amendment is a great step forward in bringing uniformity and order to
the co-operatives movement in India.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
11. Shri Masoom K. Shah, learned counsel appearing for the
Respondent No.1 in Civil Appeal No. 9108-9109 of 2014, has made an
impassioned plea that the donee of a limited amending power cannot do
indirectly what it is not permitted to do directly. Accordi ng to him, a
coach-and-four is driven into the principle of federalism as understood
by our Constitution, by curtailing/restricting the State’s legislative powers
contained in Entry 32 List 2, 7th Schedule. According to the learne d
counsel, a careful reading of Part IXB of the Constitution would show
that the unfettered power of the State legislatures prior to the amendment
has now been fettered by the provisions of Part IXB in several material
particulars; for example, the fixation of the maximum number of directors
of co-operative societies; the reservation provision contained in 243ZJ;
the duration of the term of office of elected members of the board of co-
operative societies etc. In short, what has been done is to add exception
after exception to Entry 32 thereby carving out of Entry 32 a number of
matters which otherwise were exclusively within the domain of the State
Legislatures. He relied strongly upon Articles 243ZI & 243ZT, making it
clear that there is a direct assault on Entry 32, List II of the 7th Schedule
inasmuch as after one year, all State legislations that are contrary to the
provisions of Part IXB are of no effect, and that an affirmative obligation
is cast upon the States to enact legislation only in accordance with the
restrictions contained in Part IXB. He also strongly relied upon the very
judgments cited by the learned Attorney General to argue that, in effect,
as a direct inroad is made into Article 246(3) and Entry 32 List 2, such
amendment would have to be struck down for want of ratification as it
impacts a very important part of the Constitution, namely , the federal
structure and the distribution of legislative powers between t he Union
and the States. He also placed strong reliance on Builders’ Assn. of
India v. Union of India , (1989) 2 SCC 645 , and a passage from
Seervai’s Constitutional Law of India to argue that even if no legislative
power is transferred qua co-operative societies from the States to the
Union, yet the curtailment (or expansion) of a legislat ive field which
pertains exclusively to the States and which impacts federalism would
certainly amount to a “change” both in Article 246(3) and in the legislative
lists and would thus require ratification. For this purpose, he also strongly
relied upon para 21 of K. Damodarasamy Naidu & Bros. v. State of
T.N., (2000) 1 SCC 521 . He then countered the learned Attorney
General’s argument with reference to Cellular Operators Assn. of India
v. TRAI, (2016) 7 SCC 703 (para 57), to argue that even if 17 States
489
thereafter amend their laws in furtherance of the C onstitutional
Amendment, this would make no difference to the constitutional position
if in fact the requisite ratification under Article 368(2) proviso is lacking.
The validity of a constitutional amendment does not depend upon whether
a State government accepts it or whether a State government challenges
it. He then went on to make two further arguments insofar as mul ti-
State co-operative societies are concerned. First and fore most, given
the tests of severability, he argued that multi-State co-operative societies
are inextricably entwined with co-operative societies and the 97th
Constitution Amendment would never have been enacted for multi-State
co-operative societies alone. Even otherwise, the challenge made in the
Writ Petition was to the entirety of Part IXB and the part relating to
multi-State co-operative societies, not being severabl e, the entirety of
Part IXB has correctly been held to be unconstitutional by the impugned
judgment. He also argued that if this Constitutional Am endment is
allowed to pass constitutional muster without ratification, there would be
no end to further amendments which would then indirectly rob the States
of their legislative powers, changing a quasi-federal state into a unitary
one.
12. He then argued a point that was neither raised in the pleadings
nor in arguments in the High Court. He submitted that even qua Multi-
State Co-operative Societies, since a change has been made in Entry 44
List I which contains the power to legislate qua Multi-State Co-operative
Societies, the width of the Entry is curtailed by P art IXB of the
Constitution, which would, therefore, in any case require ratification by
the States. To this contention, the learned Attorney General replied by
submitting that it is only those Entries such as Entry 2A of List I (referred
to in Entry 2 which is subject to Entry 2A) that would be covered by the
proviso to Article 368(2) if one were to bear in mind that Article 368(2)
proviso has been enacted with the object of preserving the quasi-federal
structure of the Constitution.
13. Smt. Ritika Sinha, learned counsel appearing for the Intervenor
in IA No. 3/2014 in CA Nos. 9108-9109/2014, stressed the language of
Article 243ZI and 243ZT. According to her, these Articles make it clear
that the States’ legislative competence has expressly been made subject
to the provisions of Part IXB, thereby engrafting an exception, directly,
to Entry 32 of List II. Also, the non-obstante clause in Article 243ZT
would make it clear that State legislation that has been enacted under a
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
plenary power has now been edged out to make way for the provisions
of Part IXB, which have to be compulsorily enacted by State legislatures
in the place of earlier State legislations to the contrary. For this purpose,
she relied upon paras 26 and 27 of Vipulbhai M. Chaudhary v. Gujarat
Coop. Milk Mktg. Federation Ltd. (supra). She then relied upon
passages in Sajjan Singh (supra) and Wanchoo, J’s judgment in Golak
Nath (supra) to argue that even if the stringent tests laid down therein
are to be applied, they would apply on the facts of this case, inasmuch as
a direct and substantial inroad has been made into Entry 32 List II of the
7th Schedule. She concluded by relying upon D.C. Wadhwa v. State of
Bihar, (1987) 1 SCC 378 (para 7), by submitting that what cannot be
achieved directly cannot now be achieved indirectly by means of inserting
Part IXB to the Constitution of India. Shri Maruthi Rao, learned counsel
for the Intervenor in IA No. 4/2014 CA Nos. 9108-9109/2014, broadly
supported the submissions made by Shri Shah and Ms. Sinha.
14. Having heard learned counsel for all the parties, it is first
important to advert to the constitutional scheme of legislative relations
between the Union of India and the States. This is laid down in P art
IXB, Chapter I in Articles 245 and 246 as follows: -
PART XI
RELATIONS BETWEEN THE UNION AND THE STATES
CHAPTER I.—LEGISLATIVE RELATIONS
Distribution of Legislative Powers
245. Extent of laws made by Parliament and by the
Legislatures of States. —
(1) Subject to the provisions of this Constitution, Parliament may
make laws for the whole or any part of the territory of India, and
the Legislature of a State may make laws for the whole or any
part of the State.
(2) No law made by Parliament shall be deemed to be invalid on
the ground that it would have extraterritorial operation.
246. Subject-matter of laws made by Parliament and by the
Legislatures of States. —
(1) Notwithstanding anything in clauses (2) and (3), Parliam ent
has exclusive power to make laws with respect to any of the
491
matters enumerated in List I in the Seventh Schedule (in this
Constitution referred to as the “Union List”).
(2) Notwithstanding anything in clause (3), Parliament, and, subject
to clause (1), the Legislature of any State 1*** also, have power
to make laws with respect to any of the matters enumerate d in
List III in the Seventh Schedule (in this Constitution referred to as
the “Concurrent List”).
(3) Subject to clauses (1) and (2), the Legislature of any State has
exclusive power to make laws for such State or any part thereof
with respect to any of the matters enumerated in List II i n the
Seventh Schedule (in this Constitution referred to as the “St ate
List”).
(4) Parliament has power to make laws with respect to any matter
for any part of the territory of India not included 2 [in a S tate]
notwithstanding that such matter is a matter enumerated in the
State List.
15. A cursory reading of these Articles would show that whereas
Parliament may make laws for the whole or any part of the territory of
India, the legislation of a State may make laws for the whole or any part
of the State. Article 246 then goes on to refer to laws with respect to
any of the matters enumerated in 3 Lists contained in the 7th schedule to
the Constitution of India. List I contains subjects or topic s on which
Parliament has exclusive power to make laws; List III in the Concurrent
List contains topics on which both Legislatures may make laws; and
List II, with which we are directly concerned, gives the States exclusive
power to make laws for such State or part thereof with respect to any of
the matters contained therein. So far as Union territories are concerned,
Parliament is given power under Article 246(4) without constraint as to
subject matter as it may also legislate with respect to topics covered by
List II.
16. In a catena of judgments of this Court, it has been decla red
that whereas Article 246 contains the power to legislate, the topics of
legislation contained in the three Lists are descri bed as ‘fields of
legislation’. This is felicitously set out in Hoechst Pharmaceuticals Ltd.
v. State of Bihar, (1983) 3 SCR 130 :
“It is equally well settled that the various entries in the three Lists
are not ‘powers’ of legislation, but ‘fields’ of legislation. The power
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
to legislate is given by Article 246 and other Articles of the
Constitution” (at pg. 184)
17. Dealing with the non-obstante clause contained in Articl es
246(1) and 246(2) and the ‘subject to’ clause contained in Article 246(3),
this Court, following Federal Court and Privy Council judgments, ha s
held that these non-obstante and ‘subject to’ clauses lay down the doctrine
of federal supremacy, which can be stated thus: topics in the State List
have to give way to topics contained in the Union or Concurrent List in
the event of an overlap between entries in these lists. Suc h overlap is
not to be easily found – on the contrary, it is only in the cas e of an
inevitable and irreconcilable conflict that the width of an entry in the
State List can be curtailed by an overlap with an entry in either List 1 or
List 3. Thus, in Kerala SEB v. Indian Aluminium Co. Ltd., (1976) 1
SCC 466, this Court held: -
“5. In view of the provisions of Article 254, the powe r of
Parliament to legislate in regard to matters in List III, which are
dealt with by clause (2), is supreme the Parliament has exclusive
power to legislate with respect to matters in List 1. T he State
Legislature has exclusive power to legislate with respect to matters
in List II. But this is subject to the provisions of clause (1) [leaving
out for the moment the reference to clause (2)]. The power o f
Parliament to legislate with respect to matters included in List I is
supreme notwithstanding anything contained in clause (3) [again
leaving out of consideration the provisions of clause (2)] . Now
what is the meaning of the words “notwithstanding” in clause (1)
and “subject to” in clause (3)? They mean that where an entry is
in general terms in List II and part of that entry is in specific
terms in List I, the entry in List I takes effect notwithstanding the
entry in List II. This is also on the principle that the “ special”
excludes the “general” and the general entry in List II is subject
to the special entry in List 1. For instance, thoug h house
accommodation and rent control might fall within either the State
list or the concurrent list, Entry 3 in List I of Seventh Sc hedule
carves out the subject of rent control and house accommodation
in Cantonments from the general subject of house accommodation
and rent control (see Indu Bhusan v. Sundari Devi [(1969) 2
SCC 289]. Furthermore, the word “notwithstanding” in clause (1)
also means that if it is not possible to reconcile the two entries the
493
entry in List I will prevail. But before that happens attempt should
be made to decide in which list a particular legislation falls. For
deciding under which entry a particular legislation falls the theory
of “pith and substance” has been evolved by the courts. If in pith
and substance a legislation falls within one list or the ot her but
some portion of the subject-matter of that legislation incidentally
trenches upon and might come to fall under another list, the Act
as a whole would be valid notwithstanding such inci dental
trenching. These principles have been laid down in a number of
decisions.”
18. In Hoechst Pharmaceuticals Ltd. (supra), this Court held: -
The words “notwithstanding anything contained in clauses (2) and
(3)” in Article 246(1) and the words “subject to clauses (1) a nd
(2)” in Article 246(3) lay down the principle of federal supremacy
viz. that in case of inevitable conflict between Union and S tate
powers, the Union power as enumerated in List I shall preva il
over the State power as enumerated in Lists II and III, and i n
case of overlapping between Lists II and III, the former sh all
prevail. But the principle of federal supremacy laid down in Article
246 of the Constitution cannot be resorted to unless there is a n
“irreconcilable” conflict between the entries in the Union and State
Lists. In the case of a seeming conflict between the entries in the
two Lists, the entries should be read together without givi ng a
narrow and restricted sense to either of them. Secondly, an attempt
should be made to see whether the two entries canno t be
reconciled so as to avoid a conflict of jurisdiction. It shoul d be
considered whether a fair reconciliation can be achieved by giving
to the language of the Union Legislative List a meaning which, if
less wide than it might in another context bear, is yet one that can
properly be given to it and equally giving to the language of the
State Legislative List a meaning which it can properly bear. The
non obstante clause in Article 246(1) must operate only if such
reconciliation should prove impossible. Thirdly, no question of
conflict between the two Lists will arise if the impugned legislation,
by the application of the doctrine of ‘pith and substance’ appears
to fall exclusively under one list, and the encroachment upo n
another list is only incidental.
(at page 165)
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
19. Likewise, in Goodricke Group Ltd. v. State of W.B., 1995
Supp (1) SCC 707, this Court reiterated this constitutional scheme as
follows:
12. The scheme of the entries in the three lists in the Se venth
Schedule is set out in the decision of this Court i n M.P.V.
Sundararamier & Co. v. State of A.P. [1958 SCR 1422] and
needs no reiteration. Similarly, the proposition that the sev eral
entries are legislative heads and must be construed liberally is too
well-settled to require any elaboration. It is equally well-recognised
that where there are three lists containing a large number of entries,
there is bound to be some overlapping among them. In such a
situation, the rule of pith and substance has to be appl ied to
determine to which entry does a given piece of legislation relate.
Once it is so determined, any incidental trenching on the fi eld
reserved to the other legislature is of no consequence. Of course,
the extent of encroachment may be an element in determining
whether the Act is a colourable piece of legislation. Yet another
relevant principle is the one enunciated in Union of India v. H.S.
Dhillon [(1971) 2 SCC 779] where the legislative competence of
Parliament to enact a law is questioned, all that one has to ask is
whether it relates to any of the entries in List II and if it does not,
no further question need be asked and Parliament’s legislative
competence must be upheld. This decision also explains why did
the Founding Fathers find it necessary to have three lists. In
International Tourist Corpn. v. State of Haryana [(1981) 2
SCC 318] however, a caution has been administered that before
exclusive legislative competence can be claimed for Parliament,
the legislative incompetence of the State Legislature must be clearly
established. In S.R. Bommai v. Union of India [(1994) 3 SCC 1]
one of us (B.P. Jeevan Reddy, J.) cautioned that in our constitutional
system, where all important legislative heads are assign ed to
Centre, the courts should be slow to adopt any interpretation which
tends to deprive the States of the few powers assigned to the m
under the Constitution.
20. In Govt. of A.P. v. J.B. Educational Society, (2005) 3 SCC
212, the aforesaid was reiterated as follows:
9. Parliament has exclusive power to legislate with respect to any
of the matters enumerated in List I, notwithstanding anything
495
contained in clauses (2) and (3) of Article 246. The non obstante
clause under Article 246(1) indicates the predomina nce or
supremacy of the law made by the Union Legislature in the event
of an overlap of the law made by Parliament with respect t o a
matter enumerated in List I and a law made by the S tate
Legislature with respect to a matter enumerated in List I I of the
Seventh Schedule.
10. There is no doubt that both Parliament and the State Legislature
are supreme in their respective assigned fields. It i s the duty of
the court to interpret the legislations made by Parliament and the
State Legislature in such a manner as to avoid any conflic t.
However, if the conflict is unavoidable, and the two enactments
are irreconcilable, then by the force of the non obstante clause in
clause (1) of Article 246, the parliamentary legislation would prevail
notwithstanding the exclusive power of the State Legislature to
make a law with respect to a matter enumerated in the State List.
21. In Greater Bombay Coop. Bank Ltd. v. United Yarn Tex
(P) Ltd., (2007) 6 SCC 236, it was held:
92. The first three clauses of Article 246 of the Constitution relate
to the demarcation of legislative powers between Parliament and
the State Legislatures. Under clause (1), notwithstanding anything
contained in clauses (2) and (3), Parliament has been given t he
exclusive power to make laws with respect to any of the matters
enumerated in List I or the Union List in the Seventh Schedule .
Clause (2) empowers Parliament and the State Legislatures subject
to the power of Parliament under sub-clause (1), to make l aws
with respect to any of the matters enumerated in List II I in the
Seventh Schedule described in the Constitution as the “Concurrent
List” notwithstanding anything contained in sub-clause (3). Under
clause (3) the State Legislatures have been given exclusive powers
to make laws in respect of matters enumerated in List II i n the
Seventh Schedule described as the “State List” but subject to
clauses (1) and (2). The three lists while enumerating in detail the
legislative subjects carefully distribute the areas of l egislative
authority between Parliament (List I) and the State (List II). The
supremacy of Parliament has been provided for by the non
obstante clause in Article 246(1) and the words “subject t o” in
Articles 246(2) and (3). Therefore, under Article 246(1) if any of
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
the entries in the three lists overlap, the entry in List I will prevail.
Additionally, some of the entries in the State List have been made
expressly subject to the power of Parliament to legisla te either
under List I or under List III. Entries in the lists of the Seventh
Schedule have been liberally interpreted; nevertheless courts have
been wary of upsetting this balance by a process of interpretation
so as to deprive any entry of its content and reduce it to “useless
lumber”. The use of the word “exclusive” in clause (3) denotes
that within the legislative fields contained in List II, the State
Legislatures exercise authority as plenary and ampl e as
Parliament’s.
(Emphasis supplied)
22. In State of W.B. v. Committee for Protection of Democratic
Rights, (2010) 3 SCC 571, this Court held:
25. The non obstante clause in Article 246(1) contemplates the
predominance or supremacy of the Union Legislature. This power
is not encumbered by anything contained in clauses (2) and (3)
for these clauses themselves are expressly limited and made
subject to the non obstante clause in Article 246(1). The Sta te
Legislature has exclusive power to make laws for such Stat e or
any part thereof with respect to any of the matters enumerated in
List II in the Seventh Schedule and it also has the power to make
laws with respect to any matters enumerated in List III
(Concurrent List). The exclusive power of the State Legi slature
to legislate with respect to any of the matters enumerated in List
II has to be exercised subject to clause (1) i.e. the exclusive power
of Parliament to legislate with respect to matters enume rated in
List I. As a consequence, if there is a conflict between an entry in
List I and an entry in List II, which is not capable of reconciliation,
the power of Parliament to legislate with respect to a matter
enumerated in List II must supersede pro tanto the exerc ise of
power of the State Legislature.
26. Both Parliament and the State Legislature have concurrent
powers of legislation with respect to any of the matters enumerated
in List III. The words “notwithstanding anything contained in
clauses (2) and (3)” in Article 246(1) and the words “subject to
clauses (1) and (2)” in Article 246(3) lay down the principle of
497
federal supremacy viz. that in case of inevitable conflict between
the Union and State powers, the Union power as enumerated in
List I shall prevail over the State power as enumerated in Lists II
and III and in case of an overlapping between Lists II and III, the
latter shall prevail.
27. Though, undoubtedly, the Constitution exhibits supremacy of
Parliament over the State Legislatures, yet the principle of federal
supremacy laid down in Article 246 of the Constitution cannot be
resorted to unless there is an irreconcilable direct conflict between
the entries in the Union and the State Lists. Thus, there is no
quarrel with the broad proposition that under the Constitution there
is a clear demarcation of legislative powers between the Union
and the States and they have to confine themselves within the
field entrusted to them. It may also be borne in mind that the
function of the lists is not to confer powers; they merely demarcate
the legislative field. But the issue we are called upon to determine
is that when the scheme of the Constitution prohibits encroachment
by the Union upon a matter which exclusively falls within the
domain of the State Legislature, like public order, police, etc., can
the third organ of the State viz. the judiciary, direct CBI, an agency
established by the Union to do something in respect of a Sta te
subject, without the consent of the State Government concerned?
23. So far as co-operative societies are concerned, it can be seen
that it is entirely a matter for the States to legislate upon, being the last
subject matter mentioned in Entry 32 List II. At this stage, it is important
to note that Entry 43 of List I, which deals with incorporation, regulation
and winding up of trading corporations including banking, insurance and
financial corporations expressly excludes co-operative societies from its
ambit. Entry 44 List I, which is wider than Entry 43 in that it is not limited
to trading corporations, speaks of corporations with objects not confined
to one State. This Court has therefore held, on a reading of these entries,
that when it comes to Multi State Co-operative Societies with 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. Thus, in Daman
Singh v. State of Punjab, (1985) 2 SCC 670, this Court laid down: -
7. …. … According to Mr Ramamurthi the express exclusion of
cooperative societies in Entry 43 of List I and the express inclusion
of cooperative societies in Entry 32 of List II separately and apart
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
from but along with corporations other than those specified in List
I and universities, clearly indicated that the constitutional scheme
was designed to treat cooperative societies as institutions distinct
from corporations. On the other hand one would think that the
very mention of cooperative societies both in Entry 43 of List I
and Entry 32 of List II along with other corporations gave an
indication that the Constitution makers were of the vie w that
cooperative societies were of the same genus as other corporations
and all were corporations. In fact the ve1ry express exclusion of
cooperative societies from Entry 43 of List I is indicative of the
view that but for such exclusion, cooperative societies would be
comprehended within the meaning of expression “corporations”.
24. Likewise, in Apex Cooperative Bank of Urban Bank of
Maharashtra & Goa Ltd. v. Maharashtra State Cooperative Ba nk
Ltd., (2003) 11 SCC 66, this Court delineated the two separate spheres
relating to multi-State co-operative societies and co-operative societies
as follows: -
25. Another aspect which must be noticed is that in the Constitution
of India, the subject pertaining to cooperative societies is in the
State List i.e. Entry 32 of List II of Schedule VII. The Union List
has Entry 44 of List I of Schedule VII which deals with
corporations. In this case we are not concerned with the validity
of a Central legislation and thus do not deal with that aspect. For
purpose of the judgment we will take it that a cooperative society
with objects not confined to one State would fall within the term
corporation, and thus a Central legislation may be saved. However,
from the constitutional provisions it is clear that matters pertaining
to cooperative societies are in the State List. Thus ma ny States
have enacted laws relating to cooperative societies. We have not
seen other Acts. However, as this case concerns a soci ety in
Maharashtra, the Maharashtra Cooperative Societies A ct was
shown to us. Significantly, this law does not define a cooperative
society. It did not need to, as a society registered under it would
be automatically covered. The need to define a cooperative society
arises only in a Central legislation which does not co ver all
cooperative societies and thus needs to indicate to which society
it applies.
499
25. Likewise, in Thalappalam Service Coop. Bank Ltd. v. State
of Kerala, (2013) 16 SCC 82 , this Court held:
26. The cooperative society is a State subject under Schedule
VII List II Entry 32 to the Constitution of India. Most of the States
in India enacted their own Cooperative Societies Act with a view
to provide for the orderly development of the cooperative sector
in the State to achieve the objects of equity, social just ice and
economic development, as envisaged in the directive principles of
State policy, enunciated in the Constitution of India. For cooperative
societies working in more than one State, the Multi -State
Cooperative Societies Act, 1984 was enacted by Parliament under
Schedule VII List I Entry 44 of the Constitution. The cooperative
society is essentially an association or an association of pers ons
who have come together for a common purpose of economic
development or for mutual help.
26. It may thus be seen that there is no overlap whatsoever so far
as the subject ‘co-operative societies’ is concerned. Co-operative
societies as a subject matter belongs wholly and exclusively to the State
legislatures to legislate upon, whereas multi-State co-operative societies
i.e., co-operative societies having objects not confined to one state alone,
is exclusively within the ken of Parliament. This being the case, it may
safely be concluded, on the facts of this case, that there is no overlap
and hence, no need to apply the federal supremacy principl e as laid
down by the judgments of this court. What we are therefore left with is
the exclusive power to make laws, so far as co-operative societies a re
concerned, with the State Legislatures, which is contained i n Article
246(3) read with Entry 32 of List II. In fact, in K. Damodarasamy
Naidu & Bros. v. State of T.N., (2000) 1 SCC 521 , this court held:
“21. Parliament, when exercising the powers to amend th e
Constitution under Article 368, cannot and does not amend State
Acts. There is no other provision in the Constitution which so
permits and there is no judgment of this Court that so holds. The
power to make laws for the States in respect of matters list ed in
List II in the Seventh Schedule is exclusively that of the State
Legislatures. …..”
(emphasis supplied)
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
27. At this stage it is important to refer to the power of amendment
of the Constitution contained in Article 368 of the Constitution of India.
Article 368 reads as follows: -
PART XX
AMENDMENT OF THE CONSTITUTION
368. Power of Parliament to amend the Constitution and
procedure therefor. —
(1) Notwithstanding anything in this Constitution, Parliament may
in exercise of its constituent power amend by way of additi on,
variation or repeal any provision of this Constitution in accordance
with the procedure laid down in this article.
(2) An amendment of this Constitution may be initiated only by
the introduction of a Bill for the purpose in either House of
Parliament, and when the Bill is passed in each House by a majority
of the total membership of that House and by a majority of not
less than two-thirds of the members of that House present a nd
voting, it shall be presented to the President who shall giv e his
assent to the Bill and thereupon the Constitution shall stand
amended in accordance with the terms of the Bill:
Provided that if such amendment seeks to make any change in—
(a) article 54, article 55, article 73, article 162, article 241 or article
279A or
(b) Chapter IV of Part V, Chapter V of Part VI, or Chapt er I of
Part XI, or
(c) any of the Lists in the Seventh Schedule, or
(d) the representation of States in Parliament, or
(e) the provisions of this article,
the amendment shall also require to be ratified by the Legislatures
of not less than one-half of the States by resolutions to that effect
passed by those Legislatures before the Bill making provision for
such amendment is presented to the President for assent.
xxx xxx xxx
501
28. It may be seen that Article 368(1) refers to Parliament, which
may exercise its “constituent power” to amend the constitution by way
of addition, variation or repeal of any provision of the Constitution. This
however has to be in accordance with the mandatory procedure la id
down in the Article.
29. So far as amendments that are made to any of the provisions
of the Constitution, save and except Articles like Article 4 which expressly
state that though the Constitution may be amended, no such amendment
shall be deemed to be an amendment of the Constitution for the purpose
of Article 368, all other articles of the Constitution may be amended but
only in accordance with the procedure laid down in Sub-Article (2). So
far so good. However, we are concerned with the procedure when it
comes to amending certain specified articles/provisions in the proviso to
Article 368(2). Sub-clause (a) of the proviso refers to Articles 54 and 55
which deal with the President of India, Articles 73 and 162 which deal
with the executive power of the Union and the State Governments, Article
241 which deals with High Courts for Union territories, and Article 279A
which deals with the Goods and Services Tax Council. In this case, we
are not directly concerned with Sub-clause (a) of the proviso.
30. Sub-clause (b) of the proviso is important and speaks of Chapter
IV of Part V which deals with the Union Judiciary consisting of the
Supreme Court of India, Chapter V of Part VI which dea ls with the
High Courts in the States, and Chapter I of Part XI which de als with
legislative relations between the Union and the States. We are directly
concerned with sub-clause (b) insofar as the impact of a constitutional
amendment on Article 246, which is part of Chapter I of Part XI, is
concerned.
31. Sub-clause (c) of the proviso then speaks of any change being
made in any of the lists in the 7th Schedule, which would certainly include
Entry 32 List 2 of the 7th Schedule, with which we are directly concerned.
Sub-clauses (d) and (e) refer to the representation o f the States in
Parliament and a change to be made in the provisions of Artic le 368
itself respectively, with which we are not directly concerned.
32. If the subject matter of an amendment falls within the proviso,
then the additional procedural requirement is that such amendment shall
also be required to be ratified by the legislatures of not less than one half
of the States by resolution to that effect passed by those legislatures
before the bill making provision for such amendment is presented to the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
President for assent. Unlike the 73rd and 74th Constitution Amendments
Acts, which inserted Part IX dealing with Panchayats and Pa rt IXA
dealing with Municipalities, which amendments were also ratified by not
less than one half of the States, the 97th Amendment which inserts the
chapter dealing with co-operative societies has not been so ratified. The
question which arises in this appeal is whether the addition of this chapter
can be said to be void or non est for want of such ratification.
33. At this point, it is important to first deal with the ambit of
Parliament’s ‘constituent power’ referred to in Article 368(1). Several
judgments of this Court have held that though an amendment of the
Constitution is the exercise of constituent power which differs from
ordinary legislative power, such constituent power does not conv ert
Parliament into an original constituent assembly. Parliament being the
donee of a limited power may only exercise such power in accordance
with both the procedural and substantive limitations contai ned in the
Constitution of India. The procedural limitations are contained in Sub-
Article 2 of Article 368. The substantive limitation has been laid down
by the celebrated decision of this Court in Kesavananda Bharati v.
State of Kerala , (1973) 4 SCC 225 , by which a constitutional
amendment can only pass muster if it does not damage the basic structure
or essential features of the Constitution.
34. Thus, in M. Nagaraj v. Union of India, (2006) 8 SCC 212,
this Court held:
103. The criterion for determining the validity of a law is t he
competence of the law-making authority. The competence of the
law-making authority would depend on the ambit of the legislative
power, and the limitations imposed thereon as also the limitations
on the mode of exercise of the power. Though the amending power
in the Constitution is in the nature of a constituent power and
differs in content from the legislative power, the limitations imposed
on the constituent power may be substantive as well as procedural.
Substantive limitations are those which restrict the fi eld of the
exercise of the amending power. Procedural limitations on t he
other hand are those which impose restrictions with regard to the
mode of exercise of the amending power. Both these limitations
touch and affect the constituent power itself, disregard of which
invalidates its exercise. (See Kihoto Hollohan v. Zachillhu [1992
Supp (2) SCC 651].)
503
35. In I.R. Coelho v. State of T.N., (2007) 2 SCC 1, this Court
held:
122. The scope and content of the words “constituent power”
expressly stated in the amended Article 368 came up for
consideration in Indira Gandhi case [1975 Supp SCC 1]. Article
329-A(4) was struck down because it crossed the implied limitation
of amending power, that it made the controlled Consti tution
uncontrolled, that it removed all limitations on the power to amend
and that it sought to eliminate the golden triangle of Arti cle 21
read with Articles 14 and 19. (See also Minerva Mills case [(1980)
3 SCC 625].)
123. It is Kesavananda Bharati case [(1973) 4 SCC 225] read
with clarification of Khanna, J. in Indira Gandhi case [1975
Supp SCC 1] which takes us one step forward, namely, t hat
fundamental rights are interconnected and some of them form
part of the basic structure as reflected in Article 15, A rticle 21
read with Article 14, Article 14 read with Articles 16(4), (4 -A),
(4-B), etc. Bharati [(1973) 4 SCC 225] and Indira Gandhi [1975
Supp SCC 1] cases have to be read together and if so read the
position in law is that the basic structure as reflected in the above
articles provide a test to judge the validity of the amendment by
which laws are included in the Ninth Schedule.
124. Since power to amend the Constitution is not unlimited, if
changes brought about by amendments destroy the identity of the
Constitution, such amendments would be void. That is why when
entire Part III is sought to be taken away by a consti tutional
amendment by the exercise of constituent power under Article
368 by adding the legislation in the Ninth Schedule, the question
arises as to the extent of judicial scrutiny available to determine
whether it alters the fundamentals of the Constitution. Secularism
is one such fundamental, equality is the other, to give a few
examples to illustrate the point. It would show tha t it is
impermissible to destroy Articles 14 and 15 or abrogate or en bloc
eliminate these fundamental rights. To further illustrate the point,
it may be noted that Parliament can make additions in the three
legislative lists, but cannot abrogate all the lists as it would abrogate
the federal structure.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
125. The question can be looked at from yet another angle also.
Can Parliament increase the amending power by amendment of
Article 368 to confer on itself the unlimited power of amendment
and destroy and damage the fundamentals of the Constitution?
The answer is obvious. Article 368 does not vest such a power in
Parliament. It cannot lift all restrictions placed on the amending
power or free the amending power from all its restrictions. This is
the effect of the decision in Kesavananda Bharati case [(1973)
4 SCC 225] as a result of which secularism, separation of power,
equality, etc., to cite a few examples, would fall be yond the
constituent power in the sense that the constituent power cannot
abrogate these fundamentals of the Constitution. Without equality
the rule of law, secularism, etc. would fail. That is why Khanna,
J. held that some of the fundamental rights like Article 15 f orm
part of the basic structure.
xxx xxx xxx
137. In Kesavananda Bharati case [(1973) 4 SCC 225] the
discussion was on the amending power conferred by unamended
Article 368 which did not use the words “constituent power”. We
have already noted the difference between original powe r of
framing the Constitution known as constituent power and the nature
of constituent power vested in Parliament under Article 368. By
addition of the words “constituent power” in Article 368, the
amending body, namely, Parliament does not become the original
Constituent Assembly. It remains a Parliament under a controlled
Constitution. Even after the words “constituent power” are inserted
in Article 368, the limitations of doctrine of basic structure would
continue to apply to Parliament. It is on this premise that clauses
(4) and (5) inserted in Article 368 by the 42nd Amendment were
struck down in Minerva Mills case [(1980) 3 SCC 625].
36. A challenge to a constitutional amendment may, therefore, be
on procedural or substantive grounds as stated hereinabove. The present
case concerns itself with the procedural ground contained in Article 368(2)
proviso.
37. For Article 368(2) proviso to apply, various tests have been
laid down by this Court in some of its judgments. Since the t ests laid
down in Sankari Prasad Singh (supra) and Sajjan Singh (supra) are
referred to in Kihoto Hollohan’s case (supra), we can refer to this
judgment in some detail.
505
38. The majority judgment of three learned Judges b y
Venkatachaliah, J. sets out Paragraph 7 of the 10 th Schedule of the
Constitution of India, which deals with disqualification on the ground of
defection. The Court was concerned with the constitutional validity of
the 10th Schedule on both substantive and procedural grounds. So far as
the procedural ground is concerned, Paragraph 7, which barred the
jurisdiction of all courts, was said to have required ratific ation by the
States and the 10 th Schedule, not having been ratified by the States, it
was urged that the entire amendment would be infirm on this c ount.
Paragraph 7 of the 10th Schedule is set out in para 16 of the judgment as
follows: -
“7. Bar of jurisdiction of courts. — Notwithstanding anything in
this Constitution, no court shall have any jurisdiction in respect of
any matter connected with the disqualification of a member of a
House under this Schedule.”
39. In para 24, several questions were set out which were required
to be answered by the Constitution Bench in that case. We are directly
concerned with questions (B) to (D) which read as follows: -
24. On the contentions raised and urged at the hearing the questions
that fall for consideration are the following:
xxx xxx xxx
(B) Having regard to the legislative history and evolution of the
principles underlying the Tenth Schedule, Paragraph 7 thereof in
terms and in effect, brings about a change in the operation and
effect of Articles 136, 226 and 227 of the Constitution of India
and, therefore, the Bill introducing the amendment attracts the
proviso to Article 368(2) of the Constitution and would require to
be ratified by the Legislature of the States before t he Bill is
presented for Presidential assent.
(C) In view of the admitted non-compliance with the proviso to
Article 368(2) not only Paragraph 7 of the Tenth Schedule, but
also the entire Bill resulting in the Constitution (Fifty-s econd
Amendment) Act, 1985, stands vitiated and the purpo rted
amendment is abortive and does not in law bring about a valid
amendment.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
Or whether, the effect of such non-compliance inval idates
Paragraph 7 alone and the other provisions which, by themselves,
do not attract the proviso do not become invalid.
(D) That even if the effect of non-ratification by the Legislature
of the States is to invalidate Paragraph 7 alone, the whole of the
Tenth Schedule fails for non-severability. Doctrine of severability,
as applied to ordinary statutes to promote their constitutionality, is
inapplicable to constitutional amendments. Even otherwise, having
regard to legislative intent and scheme of the Tenth Schedule, the
other provisions of the Tenth Schedule, after the severance and
excision of Paragraph 7, become truncated, and unworkable and
cannot stand and operate independently. The Legislature would
not have enacted the Tenth Schedule without Paragraph 7 which
forms its heart and core.
xxx xxx xxx
40. In dealing with whether Paragraph 7 would require ratification
by the States, this Court dealt with Sankari Prasad Singh (supra) and
Sajjan Singh (supra) as follows: -
58. In Sankari Prasad case [1952 SCR 89], the question was
whether the amendment introducing Articles 31-A and 31-B in
the Constitution required ratification under the sai d proviso.
Repelling this contention it was observed: (SCR p. 108)
“It will be seen that these articles do not either in terms or in
effect seek to make any change in Article 226 or in Articl es
132 and 136. Article 31-A aims at saving laws providing for
the compulsory acquisition by the State of a certain kind of
property from the operation of Article 13 read with oth er
relevant articles in Part III, while Article 31-B purport s to
validate certain specified Acts and Regulations already passed,
which, but for such a provision, would be liable to be impugned
under Article 13. It is not correct to say that the powers of the
High Court under Article 226 to issue writs ‘for the enforcement
of any of the rights conferred by Part III’ or of this Court
under Articles 132 and 136 to entertain appeals from orders
issuing or refusing such writs are in any way affected. They
remain just the same as they were before: only a certain class
of case has been excluded from the purview of Part III and
507
the courts could no longer interfere, not because their powers
were curtailed in any manner or to any extent, but because
there would be no occasion hereafter for the exercise of their
power in such cases.”
59. In Sajjan Singh case [(1965) 1 SCR 933] a similar contention
was raised against the validity of the Constitution (Sev enteenth
Amendment) Act, 1964 by which Article 31-A was again amended
and 44 statutes were added to the Ninth Schedule to the
Constitution. The question again was whether the amendment
required ratification under the proviso to Article 368. This Court
noticed the question thus: (SCR p. 940)
“The question which calls for our decision is: what would be
the requirement about making an amendment in a constitutional
provision contained in Part III, if as a result of the said
amendment, the powers conferred on the High Courts under
Article 226 are likely to be affected?”
60. Negativing the challenge to the amendment on the ground of
non-ratification, it was held: (SCR p. 944)
“… Thus, if the pith and substance test is applied t o the
amendment made by the impugned Act, it would be clear that
Parliament is seeking to amend fundamental rights solely with
the object of removing any possible obstacle in the fulfilment
of the socio-economic policy in which the party in power
believes. If that be so, the effect of the amendment on the
area over which the High Courts’ powers prescribed by Article
226 operate, is incidental and in the present case can be
described as of an insignificant order. The impugned Act does
not purport to change the provisions of Article 226 and it cannot
be said even to have that effect directly or in any appreciable
measure. That is why we think that the argument that the
impugned Act falls under the proviso, cannot be sustained.”
61. The propositions that fell for consideration in Sankari Prasad
Singh [1952 SCR 89] and Sajjan Singh cases [(1965) 1 SCR
933] are indeed different. There the jurisdiction and power of the
courts under Articles 136 and 226 were not sought to be taken
away nor was there any change brought about in those provisions
either “in terms or in effect”, since the very rights which could be
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
adjudicated under and enforced by the courts were themselves
taken away by the Constitution. The result was that there was no
area for the jurisdiction of the courts to operate upon. Matters are
entirely different in the context of Paragraph 7. Indeed the aforesaid
cases, by necessary implication support the point urged for t he
petitioners. The changes in Chapter IV of Part V and Chapter V
of Part VI envisaged by the proviso need not be direct. The change
could be either “in terms of or in effect”. It is not neces sary to
change the language of Articles 136 and 226 of the Constitution
to attract the proviso. If in effect these articles a re rendered
ineffective and made inapplicable where these article s could
otherwise have been invoked or would, but for Paragraph 7, have
operated there is ‘in effect’ a change in those provisions attracting
the proviso. Indeed this position was recognised in Sajjan Singh
case [(1965) 1 SCR 933] where it was observed: (SCR p. 944)
“If the effect of the amendment made in the fundamental rights
on Article 226 is direct and not incidental and is of a very
significant order, different considerations may perhaps arise.”
62. In the present case, though the amendment does not bring in
any change directly in the language of Articles 136, 226 and 227
of the Constitution, however, in effect paragraph 7 curtai ls the
operation of those articles respecting matters falling under the
Tenth Schedule. There is a change in the effect in Articles 136 ,
226 and 227 within the meaning of clause ( b) of the proviso to
Article 368(2). Paragraph 7, therefore, attracts the p roviso and
ratification was necessary. Accordingly, on Point (B), we hold:
“That having regard to the background and evolution of t he
principles underlying the Constitution (Fifty-second Amendment)
Act, 1985, insofar as it seeks to introduce the Tenth Schedule in
the Constitution of India, the provisions of Paragraph 7 of the
Tenth Schedule of the Constitution in terms and in effect bring
about a change in the operation and effect of Articles 136, 226
and 227 of the Constitution of India and, therefore, the amendment
would require to be ratified in accordance with the proviso to sub-
article (2) of Article 368 of the Constitution of India.”
41. Even the minority judgments of two learned Judges by Verma,
J. and Sharma, J., declared Paragraph 7 and indeed t he entire 10 th
Schedule to be constitutionally infirm as follows: -
509
156. Prima facie it would appear that Paragraph 7 does seek to
make a change in Articles 136, 226 and 227 of the Constitution
inasmuch as without Paragraph 7 in the Tenth Schedule a decision
of the Speaker/Chairman would be amenable to the jurisdiction of
the Supreme Court under Article 136 and of the High Courts under
Articles 226 and 227 as in the case of decisions as to other
disqualifications provided in clause (1) of Article 102 or 191 by
the President/Governor under Article 103 or 192 in accordance
with the opinion of the Election Commission which was the scheme
under the two earlier Bills which lapsed. However, some learned
counsel contended placing reliance on Sankari Prasad Singh
Deo v. Union of India [1952 SCR 89] and Sajjan Singh v.
State of Rajasthan [(1965) 1 SCR 933] that the effect of such
total exclusion of the jurisdiction of the Supreme Court and t he
High Courts does not make a change in Articles 136, 226 and
227. A close reading of these decisions indicates that inste ad of
supporting this contention, they do in fact negative it.
157. In Sankari Prasad [1952 SCR 89] the challenge was to
Articles 31-A and 31 2DB inserted in the Constitution by the
Constitution (First Amendment) Act, 1951. One of the objections
was based on absence of ratification under Article 368. While
rejecting this argument, the Constitution Bench held as unde r:
(SCR p. 108)
“It will be seen that these articles do not either in terms or in
effect seek to make any change in Article 226 or in Articl es
132 and 136. Article 31-A aims at saving laws providing for
the compulsory acquisition by the State of a certain kind of
property from the operation of Article 13 read with oth er
relevant articles in Part III, while Article 31-B purport s to
validate certain specified Acts and Regulations already passed,
which, but for such a provision, would be liable to be impugned
under Article 13. It is not correct to say that the powers of the
High Court under Article 226 to issue writs ‘for the enforcement
of any of the rights conferred by Part III’ or of this Court
under Articles 132 and 136 to entertain appeals from orders
issuing or refusing such writs are in any way affected. They
remain just the same as they were before: only a certain class
of case has been excluded from the purview of Part III and
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
the courts could no longer interfere, not because their powers
were curtailed in any manner or to any extent, but because
there would be no occasion hereafter for the exercise of their
powers in such cases.”
158. The test applied was whether the impugned provisions
inserted by the constitutional amendment did ‘either in terms or in
effect seek to make any change in Article 226 or in Articles 132
and 136’. Thus the change may be either in terms i.e. explicit or
in effect in these articles to require ratification. The g round for
rejection of the argument therein was that the remedy in the courts
remained unimpaired and unaffected by the change and the change
was really by extinction of the right to seek the remedy. In other
words, the change was in the right and not the reme dy of
approaching the court since there was no occasion to invoke the
remedy, the right itself being taken away. To the same e ffect is
the decision in Sajjan Singh [(1965) 1 SCR 933], wherein Sankari
Prasad [1952 SCR 89] was followed stating clearly that there
was no justification for reconsidering Sankari Prasad [1952 SCR
89].
159. Distinction has to be drawn between the abridgement or
extinction of a right and restriction of the remedy for enforcement
of the right. If there is an abridgement or extinction of the right
which results in the disappearance of the cause of action whi ch
enables invoking the remedy and in the absence of which there is
no occasion to make a grievance and invoke the subsisting remedy,
then the change brought about is in the right and not the remedy.
To this situation, Sankari Prasad [1952 SCR 89] and Sajjan
Singh [(1965) 1 SCR 933] apply. On the other hand, if the right
remains untouched so that a grievance based thereon can ari se
and, therefore, the cause of action subsists, but the remedy is
curtailed or extinguished so that the cause of action cannot be
enforced for want of that remedy, then the change made is in the
remedy and not in the subsisting right. To this latter categ ory,
Sankari Prasad [1952 SCR 89] and Sajjan Singh [(1965) 1
SCR 933] have no application. This is clear from the above quoted
passage in Sankari Prasad [1952 SCR 89] which clearly brings
out this distinction between a change in the right and a change in
the remedy.
511
160. The present case, in unequivocal terms, is that of destroying
the remedy by enacting Paragraph 7 in the Tenth Schedule making
a total exclusion of judicial review including that by the Supreme
Court under Article 136 and the High Courts under Articles 226
and 227 of the Constitution. But for Paragraph 7 which deals with
the remedy and not the right, the jurisdiction of the Supreme Court
under Article 136 and that of the High Courts under Articles 226
and 227 would remain unimpaired to challenge the decision under
Paragraph 6, as in the case of decisions relating t o other
disqualifications specified in clause (1) of Articles 102 and 191,
which remedy continues to subsist. Thus, this extinction of the
remedy alone without curtailing the right, since the question of
disqualification of a Member on the ground of defection under the
Tenth Schedule does require adjudication on enacted principles,
results in making a change in Article 136 in Chapter IV in Part V
and Articles 226 and 227 in Chapter V in Part VI of the
Constitution.
161. On this conclusion, it is undisputed that the proviso to clause
(2) of Article 368 is attracted requiring ratification by the specified
number of State Legislatures before presentation of the Bill seeking
to make the constitutional amendment to the President for h is
assent.
42. In a recent decision, namely, Dr. Jaishri Laxmanrao Patil
v. Chief Minister and Ors., 2021 SCC OnLine SC 362 , this court
considered the validity of the Constitution (102nd Amendment) Act, 2018
which, inter alia, inserted Articles 366(26C) and 342A. As a result of
this amendment, the President alone, to the exclusi on of all other
authorities, is empowered to identify Socially and Economically Backward
Classes (SEBCs) and include them in a list to be published under Article
342A(1), which shall be deemed to include SEBCs in relation to each
State and Union territory for the purposes of the Constitution.
43. This 102nd Amendment Act was challenged, inter alia, on the
ground that not being ratified by at least half of the States, the
Constitutional Amendment was infirm. Six questions were framed before
a Constitution Bench of this Court. We are concerned here with questions
4 to 6 insofar as the 102 nd Amendment Act is concerned, which are set
out in paragraph 10 of Justice Ashok Bhushan’s judgment as follows:
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
4. Whether the Constitution One Hundred and Second Amendment
deprives the State Legislature of its power to enact a legisla tion
determining the socially and economically backward classes and
conferring the benefits on the said community under its enabling
power?
5. Whether, States’ power to legislate in relation to “any backward
class” under Articles 15(4) and 16(4) is anyway abridg ed by
Article 342(A) read with Article 366(26c) of the Constitution of
India?
6. Whether, Article 342A of the Constitution abrogates State s’
power to legislate or classify in respect of “any bac kward class
of citizens” and thereby affects the federal policy/structure of the
Constitution of India?”
44. Justice Bhushan dismissed the challenge to the Constitution
102nd Amendment Act as follows:
448. We do not find any merit in the challenge to the Constitution
102nd Amendment. The Constitution 102nd Amendment does not
violate any basic feature of the Constitution. The argument of the
learned counsel for the petitioner is that Article 368 has not been
followed since the Constitution 102nd Amendment was not ratified
by the necessary majority of the State. The Parliament ne ver
intended to take the rights of the State regarding identification of
backward classes, the Constitution 102nd Amendment was not
covered by Proviso to Article 368 sub-clause (2), hence, the same
did not require any ratification. The argument of procedu ral
violation in passing the 102nd Constitutional Amendment cannot
also be accepted. We uphold the Constitution 102nd Amendment
interpreted in the manner as above.
45. This was re-stated in conclusions 27 and 32 found in paragraph
450 by Bhushan, J., and concurred with by Nazeer, J., as follows: -
450. From our foregoing discussion and finding we arrive at
following conclusions:
xxx xxx xxx
(27) It is, thus, clear as sun light that Parliamentary inte ntion
discernible from Select Committee report and statement of Minister
of Social Justice and Empowerment is that the intention of the
513
Parliament for bringing Constitutional amendment was not to take
away the power of the State to identify backward clas s in the
State.
xxx xxx xxx
(32) The Constitution 102nd Amendment Act, 2018 does not
violate any basic feature of the Constitution. We uphold the
constitutional validity of Constitution (One Hundred and second
Amendment) Act, 2018.
46. However, Justice Ravindra Bhat differed from Ju stices
Bhushan and Nazeer and was joined by Justice L. Nageswara Rao and
Justice Hemant Gupta (see paras 455 and 481 of the judgment).
47. After setting out the amendments made to the Constitution by
the 102nd Amendment Act, Justice Bhat held:
669. This Court is also of the opinion that the change brought
about by the 102nd Amendment, especially Article 342A is only
with respect to the process of identification of SEBCs and thei r
list. Necessarily, the power to frame policies and legislation with
regard to all other matters, i.e. the welfare schemes f or SEBCs,
setting up of institutions, grants, scholarships, extent of reservations
and special provisions under Article 15(4), 15(5) and 16(4) are
entirely with by the State Government in relation to its institutions
and its public services (including services under agenci es and
corporations and companies controlled by the State Government).
In other words, the extent of reservations, the kind of benefit s,
the quantum of scholarships, the number of schools which are to
be specially provided under Article 15(4) or any other beneficial
or welfare scheme which is conceivable under Article 15(4) can
all be achieved by the State through its legislative and executive
powers. This power would include making suggestions a nd
collecting data - if necessary, through statutory commissions, for
making recommendations towards inclusion or exclusion of castes
and communities to the President on the aid and advice of the
Union Council of Ministers under Article 342A. This will accord
with the spirit of the Constitution under Article 338B and the
principle of cooperative federalism which guides the interpretation
of this Constitution.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
48. After setting out extracts from the judgments in Sajjan Singh
(supra) and Kihoto Hollohan (supra), the learned Judge concluded as
follows:
682. By these parameters, the alteration of the content of st ate
legislative power in an oblique and peripheral manner would not
constitute a violation of the concept of federalism. It is only if the
amendment takes away the very essence of federalism or
effectively divests the federal content of the constitution, and
denudes the states of their effective power to legislate or frame
executive policies (co-extensive with legislative power) that the
amendment would take away an essential feature or violate the
basic structure of the Constitution. Applying such a benchmark,
this court is of the opinion that the power of identification of SEBCs
hitherto exercised by the states and now shifted to the domain of
the President (and for its modification, to Parliament) by virtue of
Article 342A does not in any manner violate the essential features
or basic structure of the Constitution. The 102nd Amendment is
also not contrary to or violative of proviso to Article 368(2) of the
Constitution of India. As a result, it is held that the writ petition is
without merit; it is dismissed.
(emphasis in original)
49. And under the heading “conclusions”, it was held:
188. xxx xxx xxx
(5) Re. Point No. 5 - Whether, States’ power to legislate in relation
to “any backward class” under Articles 15(4) and 16(4) is anyway
abridged by Article 342(A) read with Article 366(26c) of the
Constitution of India. On these two interrelated points of reference,
my conclusions are as follows:
xxx xxx xxx
(v) The states’ power to make reservations, in favour of particular
communities or castes, the quantum of reservations, the nature of
benefits and the kind of reservations, and all other matters falling
within the ambit of Articles 15 and 16 - except with respec t to
identification of SEBCs, remains undisturbed.
xxx xxx xxx
515
(6) Re Point No. 6: Article 342A of the Constitution by denuding
States power to legislate or classify in respect of “any backward
class of citizens” does not affect or damage the federal polity and
does not violate the basic structure of the Constitution of India.
50. However, Shri Venugopal, learned Attorney General, strongly
relied upon the judgments of Wanchoo, J. Ramaswamy, J. and Bachawat,
J. in Golak Nath (supra). Though these judgments are minority judgments
in that case, Shri Venugopal argued that there is nothing in the majority
judgments against what is stated in these judgments insofar as ratification
is concerned, and that therefore these judgments would have considerable
persuasive value in determining whether ratification is or is not required
under Article 368(2) proviso.
51. Wanchoo, J. in Golak Nath (supra) deals with this subject at
some length. He states: -
“If there is no actual change directly in the entrenched provision,
no ratification is required, even if any amendment of any other
provision of the Constitution may have some effect indirectly on
the entrenched provisions mentioned in the proviso.”(at page 843)
52. He goes on to discuss what was decided in Sajjan Singh’s
case (supra) and then goes on to give two examples of alterations made
in what he describes as “an unentrenched Article” w hich would
necessitate amendment of an entrenched Article and that it is only if
“Parliament takes the incredible course of amending only the
unentrenched Article and not amending the entrenched Article, c ourts
can say that ratification is necessary even for amending the unentrenched
Article, for it directly necessitates a change in an entrenche d Article.
But short of that we are of opinion that merely because the re is some
effect indirectly on an entrenched Article by amend ment of an
unentrenched Article it is not necessary that there should be ratification
in such circumstances also”.(see pages 844-845)
53. If by this, the learned Judge intended to constrict the test laid
down in Sajjan Singh’s case (supra) by introducing a further test, namely,
necessitating amendment of “an entrenched Article”, it is clear that this
judgment cannot be considered to be good law especially aft er the
judgments of both the majority and minority in Kihoto Hollohan (supra).
The same goes for Bachawat, J’s minority judgment in Golak Nath
(supra) in which the learned Judge held:
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
The contention that the constitutional amendments of Part III had
the effect of changing Articles 226 and 245 and could not be
passed without complying with the proviso to Article 368 is not
tenable. A constitutional amendment which does not profess to
amend Article 226 directly or by inserting or striking words therein
cannot be regarded as seeking to make any change in it and thus
falling within the constitutional inhibition of the proviso. Article
226 gives power to the High Court throughout the territories i n
relation to which it exercises jurisdiction to issue to any person or
authority within those territories directions, orders and writs for
the enforcement of any of the rights conferred by Part III and for
any other purpose. The Seventeenth Amendment made no direct
change in Article 226. It made changes in Part III and abridged or
took away some of the rights conferred by that Part. As a res ult
of the changes, some of those rights no longer exist and as the
High Court cannot issue writs for the enforcement of those rights
its power under Article 226 is affected incidentally. But an alteration
in the area of its territories or in the number of persons or authorities
within those territories or in the number of enforceable rights under
Part III or other rights incidentally affecting the power of the
High Court under Article 226 cannot be regarded as an amendment
of that article. (at page 919)
54. This passage again is at variance with the test laid down in
Sankari Prasad Singh Deo (supra) and the judgment in Kihoto
Hollohan (supra)which make it clear that any impact on “an entrenched
Article” would require ratification if such impact is not insignificant –
i.e., that in effect, there is a change in an “entrenched Articl e” which
significantly impacts the content of the said Article including constitutional
principles contained therein.
55. Likewise, Ramaswamy, J’s minority judgment at pages 943 to
945 expressing similar views again cannot hold water in view of what
has been stated in Sajjan Singh (supra) and both the majority and minority
judgments in Kihoto Hollohan (supra).
56. A reading of the aforesaid judgments would indicate that the
“change” spoken about by Article 368 (2) proviso in any provision of the
Constitution need not be direct in the sense of adding, subtracting, or
modifying the language of the particular Article or provision spoken of in
the proviso. The judgments above referred to speak of a ‘ change-in
517
effect’ which would mean a change which, though not in the language
of any provision of the Constitution, would yet be a change which would
impact a particular article and the principle contained ther ein in some
significant way.
57. 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 outlined hereinabove, yet within their own sphere,
the States have exclusive power to legislate on topics reserved exclusively
to them (see Bhim Singh v. Union of India , (2010) 5 SCC 538 at
paras 45, 46 and 48; B.P. Singhal v. Union of India, (2010) 6 SCC
331 at paras 40-42).
58. There can be no doubt whatsoever that Article 246(3) read
with List II of the 7 th Schedule of the Constitution of India reflects an
important constitutional principle that can be said to for m part of the
basic structure of the Constitution, namely, the fact that the Constitution
is not unitary but quasi-federal in character. The questi on that arises
before us is as to whether this principle can be said to have been infracted
by inserting Part IXB into the Constitution of India so that t he States’
legislative powers contained in Article 246(3) read with Entry 32 List II
of the 7 th Schedule can be said to have been affected in a significant
manner. At this juncture, it is also important to have a look at the judgment
of this Court in Builders’ Assn. of India v. Union of India (supra). In
this judgment, apart from a challenge made on substantive grounds, the
Constitution (46th Amendment Act), 1982 was challenged on the ground
that the proviso to Article 368(2) had not been followed inasmuch as the
ambit of Entry 54 List II dealing with a tax on sale of goods had been
expanded by inserting a definition contained in Article 366 (29 A), in
which the concept of sale of goods contained in Entry 54 was gre atly
enlarged. To be noted, Entry 54 List II itself was not the subject matter
of amendment. The question was as to the effect of the Cons titution
46th Amendment Act on Entry 54 List II in introducing Sub-Article 29A
by way of a definition clause contained in Article 366, thus expanding
the scope of Entry 54 List II. This Court repelled the aforesaid contention
holding that, in point of fact, ratification had been obtained, as follows:
28. The first contention raised before us regarding th e
constitutionality of the 46th Amendment need not detain us long.
This contention was based on the assumption that the legislatures
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
of not less than one-half of the States which were in exis tence
during the relevant period had not ratified the Bill which ultimately
became the 46th Amendment before the President gave his assent.
It was argued that such ratification was necessary si nce the
provisions contained in the 46th Amendment had the effect of
enlarging the scope of Entry 54 of List II of the Seventh Schedule
to the Constitution by empowering the legislatures of State s to
levy sales tax on the turnover relating to the transactions referred
to in sub-clauses (a) to (f) of clause (29-A) of Article 366 of the
Constitution which they could not have done before the 46th
Amendment. It was contended that irrespective of th e fact
whether the amendment of an entry in any of the lists of the
Seventh Schedule to the Constitution had the effect of eithe r
curtailing or enlarging the powers of Parliament or the legislatures
of States, a Bill making provision for such amendment had to be
ratified by legislatures of not less than one-half of the St ates by
resolutions passed to that effect before such a Bill was presented
to the President for assent in view of the express provisi ons
contained in clause ( c) of the proviso to Article 368(2) of the
Constitution.
29. At the hearing of the above case the learned Attorney General
for India produced before us the Memorandum dated 31-1-1982
signed by the Secretary General of the Rajya Sabha which reads
thus:
“RAJYA SABHA SECRETARIAT PARLIAMENT HOUSE,
NEW DELHI
No. Rs. 1/21/S1-B
Dated: 31-1-1982
Memorandum
In pursuance of Article 368 of the Constitution of India, the assent
copy of the Constitution (Forty-sixth Amendment) Bill, is presented
to the President. This Bill has been passed by the House s of
Parliament and has been also ratified by the legislatur es of not
less than one-half of the States in accordance with the provision
of the proviso to clause (2) of Article 368 of the Constitut ion.
Legislatures of the following States have passed resolu tions
ratifying the amendments:
519
(1) Haryana
(2) Himachal Pradesh
(3) Karnataka
(4) Madhya Pradesh
(5) Maharashtra
(6) Manipur
(7) Meghalaya
(8) Orissa
(9) Punjab
(10) Rajasthan
(11) Sikkim
(12) Tamil Nadu
A copy each of the letters received from these legislatures is
placed below.
sd/-
(Sudarshan Agarwal)
Secretary General
To
The Secretary to the President,
(Through the Secretary, Ministry of Law)”
The Attorney General has also produced before us th e file
containing the resolutions passed by the legislatures of the 12 States
referred to in the Memorandum, set out above. We are satisfi ed
that there has been due compliance of the provisions contained in
the proviso to Article 368(2) of the Constitution. We, therefore,
reject the first contention. Before proceeding further, we should
observe that there would have been no occasion for an argument
of this type being urged in court if at the commenceme nt of the
Act, it had been stated that the Bill in question had been presented
to the President for his assent after it had been duly ratified by the
required number of legislatures of States. We hope th at this
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
suggestion will be followed by the Central Secretariat he reafter
since we found that even the Attorney General was not quite sure
till the case was taken up for hearing that the Bill which h ad
become the 46th Amendment had been duly ratified by the required
number of States.
59. Indeed, H.M. Seervai, in his celebrated comment ary
‘Constitutional Law of India’ (4th Edition) at page 3156, has this to
say:
“Articles 245 and 246 are in Chapter1, Part XI of the Constitution,
which is one of the matters mentioned in cl. (b) of the provi so,
and the legislative lists are mentioned in cl. (c) of th e proviso.
Changes can be made in the legislative lists by addition, variation,
or repeal of an entry, or by transposing an entry from one list to
another, but the lists themselves cannot be repealed.”
(Emphasis supplied)
60. A reading of Builders’ Assn. of India v. Union of India
(supra) and the aforesaid extract from Seervai’s commentary would
show that any significant addition or curtailment of a field of legislation
which is contained in an Entry in List II of the 7 th Schedule of the
Constitution would also amount to a ‘change’ so as to attract the proviso
to Article 368(2). It is not necessary, as has been contende d by the
learned Attorney General, that a change referred to in the pr oviso to
Article 368(2) would only be if some part of a subject ma tter given to
the States were transferred to Parliament or vice versa. Even without
such transfer, if there is enlargement or curtailment of the subject matter
contained in a field of legislation exclusively reserved to the States, then
in effect a change has been made to an entry in a legislative list, which
change, if significant, would attract the proviso to Article 368(2) and
therefore require ratification.
61. It is always important to remember that in matters affecting
the Constitution of India, form always gives way to substance. There
can be no manner of doubt that had exceptions been provided in Entry
32 List II itself, such amendment to Entry 32 List II would require
ratification. There can also be no doubt that in effect if the subject matter
“co-operative societies” had been either expanded or curtailed by adding
a definition clause in Article 366 of the Constitution of India, such
expansion or curtailment would also require ratification as significant
521
changes have been made in effect in Entry 32 List II of the Constitution
of India. Likewise, if a separate part is added in the Cons titution of
India, the direct effect of adding such part being to curtail the width of
Entry 32 List II in a significant manner, again, in effect Entry 32 List II
is directly impacted, again requiring ratification. It is of no moment that
one method is chosen or preferred to another so long as Entry 32 List II
is curtailed either by adding or deleting words in Entry 32 itse lf or by
doing so through an indirect methodology, namely, adding a new definition
clause in Article 366 or adding a new part to the Constitution of India.
62. Judged by these principles, it is now necessary to analys e
Part IXB of the Constitution of India, as inserted by the Constitution 97th
Amendment Act. As the Statement of Objects and Reason s of the
Constitution 97 th Amendment Act shows, it is acknowledged that the
subject ‘co-operative societies’ is exclusively allott ed to the State
legislature under Entry 32 of the State List, as a re sult of which,
considering the need for reform in the Co-operative Societie s Acts of
the States, consultations with the State governments have been held.
After this it is stated that the Central government is committed to ensure
that co-operative societies in the country function in a democratic,
professional, autonomous and economically sound manner. It is then stated
that the new part to be inserted in the Constitution would contain
provisions which would drastically curtail the power s of the State
legislatures in that such legislations by the States would n ow have to
conform to the newly inserted part.
63. Part IX B of the Constitution consists of Articles 243ZH t o
243ZT.
64. Article 243ZH is the definition Article which defines c o-
operative societies in sub-clause (c) as meaning society r egistered or
deemed to be registered under a State law, as opposed to a multi-State
co-operative society defined in sub-clause (d), which is a s ociety with
objects not confined to one State and registered under a law for the time
being in force relating to such co-operatives. By Article 243ZI, it is made
clear that the legislature of a State may only make law insofar as it
applies to incorporation, regulation and winding up of a co-oper ative
society, subject to the provisions of Part IXB. The restrictions contained
in Part IXB may now be set out seriatim.
I. Under Article 243ZI, the legislature of a State may make
laws affecting co-operative societies only if such la ws
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
follow the principles of voluntary formation, democratic
member control, member economic participation and
autonomous functioning.
II. Under Article 243ZJ(1), the maximum number of directors
of a co-operative society cannot exceed twenty one.
Further, the State law must compulsorily provide fo r
reservation of one seat for scheduled castes or scheduled
tribes and two seats for women on the board of every co-
operative society which consists of individuals as members.
III. Under Article 243ZJ(2), the term of office of electe d
members shall be five years from the date of election.
IV. The State Legislature under Article 243ZJ(3) is bound to
make provisions for co-option of members to the board
having experience in the field of banking, management,
finance or specialization in any other field relating to t he
objects and activities undertaken by the co-operative society,
the number of such co-opted members being restricted to
two, as also the fact that such co-opted members shall not
have the right to vote.
V. Under Article 243ZK(1), the non-obstante clause contained
therein makes it clear that the State legislature has t o lay
down that the election of a board shall be conducted before
the expiry of the term of the board.
VI. Under Article 243ZL, a State legislature can only supersede
a board for a period not exceeding 6 months, if certain
enumerated conditions alone are satisfied.
VII. Under Article 243ZM, minimum qualifications and
experience of auditors and auditing firms have to be laid
down by a State Legislature, and co-operatives societi es
have to be audited only by such persons or firms.
VIII. Under Article 243ZN, the Legislature of a State must
provide that the annual general body meeting of every co-
operative society shall be convened within a period of six
months of the close of the financial year.
IX. Under Article 243ZP, every co-operative society is to file
returns within the specified period of six months of the close
523
of every financial year, indicating the list of matters set out
in the said provision.
X. Under Article 243ZQ, the Legislature of a State may make
provisions for offences relating to co-operative societie s
and penalties for such offences, provided that under sub-
clause (2), in respect of five separate subject matter s, the
Legislature of a State must mandatorily include such subject
matters.
65. From all the above, it is clear that the exclusive leg islative
power that is contained in Entry 32 List II has been signific antly and
substantially impacted in that such exclusive power is now subjected to
a large number of curtailments. Indeed, Article 243ZI sp ecifically
mandates that the exclusive legislative power contained in Entry 32 List
II of the State Legislature is now severely curtailed as i t can only be
exercised subject to the provisions of Part IXB; and further, Article 243ZT
makes it clear that all State laws which do not conform to the restrictions
mentioned in Part IXB automatically come to an end on the expiration of
one year from the commencement of the Constitution 97th Amendment
Act.
66. Indeed, this Court in Vipulbhai M. Chaudhary v. Gujarat
Coop. Milk Mktg. Federation Ltd. (supra), referred to the effect of
Article 243ZT as follows:
27. Article 243-ZT of the Constitution requires the laws relating
to cooperative societies in force in the States pri or to the
commencement of the Amendment Act to be in tune with and in
terms of the constitutional concept and set-up of cooper ative
societies. In fact, a period of one year has been provided i n the
Constitution from the commencement of the Amendment for the
required amendment or repeal by the competent legislature or by
the competent authority, of laws which are inconsistent with Part
IX-B. As a corollary, the Constitution enables the c ompetent
legislature or authority to suitably amend the existing provisions in
their laws in tune with the constitutional mandate. Thereafter, in
case there continues to be silence in the Act or bye-laws, the
court will have to read the constitutional requirements into the
existing provisions. It is essentially a process of purposive
construction of the available provisions as held by this Court i n
Pratap Chandra Mehta case [(2011) 9 SCC 573].
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
67. The aforesaid analysis of Part IXB of the Constitution leads
to the result that though Article 246(3) and Entry 32, List II of the 7 th
Schedule have not been ‘changed’ in letter, yet the impact upon the
aforesaid articles cannot be said to be insignificant. On the contrary, it is
clear that by curtailing the width of Entry 32, List II of the 7th Schedule,
Part IXB seeks to effect a significant change in Article 246(3) read with
Entry 32 List II of the 7 th Schedule inasmuch as the State’s exclusive
power to make laws with regard to the subject of co-operative societies
is significantly curtailed thereby directly impacting the qua si-federal
principle contained therein. Quite clearly, therefore, Part IXB, insofar as
it applies to co-operative societies which operate within a State, would
therefore require ratification under both sub-clauses (b) and (c) of the
proviso to Article 368(2) of the Constitution of India.
68. It is interesting to note that Part IX of the Constitution of India
which was inserted into the Constitution by the Constitu tion (73 rd
Amendment) Act, 1992 and Part IXA inserted into the Constitution by
the Constitution (74 th Amendment) Act, 1992 made similar provisions
qua Panchayats and Municipalities. Entry 5 of List II, 7th Schedule which
deals with the subject matter of legislation so far as P anchayats and
Municipalities are concerned, is set out as follows: -
List II—State List
5. Local government, that is to say, the constitution and powers of
municipal corporations, improvement trusts, districts boards, mining
settlement authorities and other local authorities for the purpose
of local self-government or village administration.
69. Both the Constitution 73 rd and 74 th Amendments were sent
for ratification and were ratified by Legislatures of more than half the
States. The reason is not far to see – like Part IXB, several restrictions
are laid down before the States can legislate on Pa nchayats and
Municipalities. Like Part IXB, such legislation is subject to Parts IX and
IXA – see Article 243C and Article 243R. Again, like Article 243ZT in
Part IXB, Articles 243N and 243ZF provide that State laws wh ich are
inconsistent with the provisions of Parts IX and IXA respec tively will
automatically cease after the expiration of one yea r from the
commencement of the two Constitutional Amendments. In addition to
these provisions, Parts IX and IXA also contain Article 243O and Article
243ZG ousting the jurisdiction of the courts and thereby, in effect, curtailing
525
the provisions of Articles 136, 226 and 227 of the Constitution of India.
Ratification of the Constitution 72nd and 73rd Amendments was therefore
necessary both under clauses (b) and (c) of the proviso to Article 368(2)
in that Article 136 was in effect curtailed (Article 136 occurring in Chapter
IV of Part V of the Constitution of India); Articles 226 and 227 were in
effect curtailed (which occur in Chapter V of Part VI of the Constitution
of India); Article 246(3) was in effect curtailed (which forms part of the
Chapter I of Part XI of the Constitution of India); and Entry 5 List 2, 7th
Schedule was also in effect curtailed, which is referrable to sub-clause
(c) of the proviso to Article 368(2) of the Constitution of India. It is clear
therefore that even previous constitutional practice of Parliament acting
in its constituent capacity qua similar subject matters reinforces the
submission of the respondent that, like the 73 rd and 74th Amendments,
the Constitution 97th Amendment Act also required ratification.
70. Shri Jani, however, argued that the constituent power that is
exercised in enacting the 97 th Amendment cannot be assimilated with
legislative power, and that once the Constitution stands amended by
insertion of Part IXB, Article 245 mandates that all legislat ion made
under Article 246 read with Lists in the 7th Schedule to the Constitution
of India is subject to the provisions of the Constitution, so that legislation
made under Article 246(3) read with Entry 32 List II becomes subject to
the provisions of Part IXB which is now a part of the Co nstitution of
India.
71. This argument is a classic instance of putting the cart before
the horse. Nobody doubts that had the amendment been ratified under
Article 368(2) proviso as held by us above, it would then operate, as a
result of which legislation under Article 246(3) read with Entry 32 List II
of the 7th Schedule would then become subject to Part IXB. In the present
case, ratification not having been effected, the Amendment is non est.
This argument is therefore rejected.
72. Shri Venugopal then argued that 17 out of 28 States had enacted
legislations incorporating provisions of Part IXB, and tha t, therefore,
they had impliedly accepted the restrictions laid down in the said Part.
This argument need not detain us inasmuch as the procedure laid down
in Article 368(2) proviso requires ratification of legislatures of one half
of the States by resolutions to that effect. This has admittedly not been
done in the present case. Also, the argument that no State has come
forward to challenge the 97th Constitution Amendment does not take the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
matter any further. When a citizen of India challenges a constit utional
amendment as being procedurally infirm, it is the duty of the c ourt to
examine such challenge on merits as the Constitution of India is a national
charter of governance affecting persons, citizens and institutions alike.
73. It was then argued by Shri Venugopal, learned Attorney General
for India, that the impugned judgment’s finding that one of the bas ic
features of the Constitution, the principle of federalism has been affected
was a finding that was unnecessary once it was foun d that the
Amendment fell foul of Article 368(2) proviso. Shri Venugopal is right
that there was no argument made that even de hors ratification, Part
IXB otherwise falls foul of the basic structure doctrine as laid down in
Kesavananda Bharati’s case (supra). We reiterate that our judgment
is confined to the procedural aspect of Article 368(2) proviso, there being
no substantive challenge to Part IXB on the ground that it vio lates the
basic structure doctrine as laid down in Kesavananda Bharati’s case
(supra).
74. We now come to an important argument made by Sh ri
Venugopal that even if it be held that Part IXB is constitutionally infirm
qua co-operative societies operating within a State, it would yet operate
qua multi-State co-operative societies and in Union territories which are
not States.
75. This necessarily brings us to whether the part dealing w ith
multi-State co-operative societies in Part IXB can be severed from the
part dealing with co-operative societies operating only w ithin a State.
Reverting to Kihoto Hollohan’s case (supra), it may be noted that the
majority and minority judgments therein were sharply divided on whether
Paragraph 7 of the 10th Schedule could be said to be severable from the
rest of the 10th Schedule so that the 10th Schedule could operate without
Paragraph 7. The majority judgment held that it could be so severed and
that the rest of the 10 th Schedule would therefore operate. This was
held by the majority as follows: -
68. The doctrine of severability has been applied by this Court in
cases of challenge to the validity of an amendment on the ground
of disregard of the substantive limitations on the amending power,
namely, alteration of the basic structure. But only the offe nding
part of the amendment which had the effect of altering the basic
structure was struck down while the rest of the amendment was
527
upheld. [See Kesavananda Bharati v. State of Kerala [(1973)
4 SCC 225], Minerva Mills Ltd. v. Union of India [(1980) 3
SCC 625], P. Sambamurthy v. State of A.P. [(1987) 1 SCC 362]
].
69. Is there anything in the procedural limitations imposed by sub-
article (2) of Article 368 which excludes the doctrine of severability
in respect of a law which violates the said limitations? S uch a
violation may arise when there is a composite Bill or what is in
statutory context or jargon called a ‘Rag-Bag’ measure seeking
amendments to several statutes under one amending measure
which seeks to amend various provisions of the Constitution some
of which may attract clauses (a) to (e) of the proviso to Article
368(2) and the Bill, though passed by the requisite majority in both
the Houses of Parliament has received the assent of the President
without it being sent to States for ratification or having been so
sent fails to receive such ratification from not less tha n half the
States before the Bill is presented for assent. Such an Amendment
Act is within the competence of Parliament insofar as it relates to
provisions other than those mentioned in clauses ( a) to (e) of
proviso to Article 368(2) but in respect of the ame ndments
introduced in provisions referred to in clauses (a) to (e) of proviso
to Article 368(2), Parliament alone is not competent to make such
amendments on account of some constitutionally recognise d
federal principle being invoked. If the doctrine of severability can
be applied it can be upheld as valid in respect of the amendments
within the competence of Parliament and only the amendment s
which Parliament alone was not competent to make could be
declared invalid.
xxx xxx xxx
71. The proviso to Article 368(2) appears to have been introduced
with a view to giving effect to the federal principle. In the matter
of amendment of provisions specified in clauses (a) to (e) relating
to legislative and executive powers of the States vis-a- vis the
Union, the Judiciary, the election of the President and the amending
power itself, which have a bearing on the States, the p roviso
imposes an additional requirement of ratification of the amendment
which seeks to effect a change in those provisions before the Bill
is presented for the assent of the President. It is salutary that the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
scope of the proviso is confined to the limits prescribed t herein
and is not construed so as to take away the power in the m ain
part of Article 368(2). An amendment which otherwise fulfils the
requirements of Article 368(2) and is outside the specified cases
which require ratification cannot be denied legitimacy on the ground
alone of the company it keeps. The main part of Article 368(2)
directs that when a Bill which has been passed by the requisite
special majority by both the Houses has received the asse nt of
the President “the Constitution shall stand amended in accordance
with the terms of the Bill”. The proviso cannot have the effect of
interdicting this constitutional declaration and mandate to mean
that in a case where the proviso has not been complied — even
the amendments which do not fall within the ambit of the proviso
also become abortive. The words “the amendment
shall also require to be ratified by the legislature” indicate t hat
what is required to be ratified by the legislatures of the S tates is
the amendment seeking to make the change in the provisions
referred to in clauses (a) to (e) of the proviso. The need for and
the requirement of the ratification is confined to that pa rticular
amendment alone and not in respect of amendments outside the
ambit of the proviso. The proviso can have, therefore, no bearing
on the validity of the amendments which do not fall within its
ambit. Indeed the following observations of this Court in Sajjan
Singh case [(1965) 1 SCR 933 : AIR 1965 SC 845] are apposite:
(SCR p. 940)
“In our opinion, the two parts of Article 368 must on a reasonable
construction be harmonised with each other in the sense that
the scope and effect of either of them should not be allowed to
be unduly reduced or enlarged.”
72. During the arguments reliance was placed on the words
“before the Bill making provision for such amendment is presented
to the President for assent” to sustain the argument that t hese
words imply that the ratification of the Bill by not less than one-
half of the States is a condition precedent for the presentation of
the Bill for the assent of the President. It is further argued that a
Bill which seeks to make a change in the provisions referred to in
clauses (a) to (e) of the proviso cannot be presented before the
President for his assent without such ratification and if assent is
529
given by the President in the absence of such ratificati on, the
amending Act would be void and ineffective in its entirety.
73. A similar situation can arise in the context of the main part of
Article 368(2) which provides: “when the Bill is passed in each
House by a majority of the total membership of that Hou se and
by a majority of not less than two-thirds of the Members of that
House present and voting, it shall be presented to the President”.
Here also a condition is imposed that the Bill shall be presented to
the President for his assent only after it has been passed in each
House by the prescribed special majority. An amendment in the
First and Fourth Schedules referable to Article 4 can be introduced
by Parliament by an ordinary law passed by simple majority. There
may be a Bill which may contain amendments made in the First
and Fourth Schedules as well as amendments in other provisions
of the Constitution excluding those referred to in the proviso which
can be amended only by a special majority under Article 368(2)
and the Bill after having been passed only by an ordinary majority
instead of a special majority has received the assen t of the
President. The amendments which are made in the First and Fourth
Schedules by the said Amendment Act were validly made in view
of Article 4 but the amendments in other provisions wer e in
disregard to Article 368(2) which requires a special majority. I s
not the doctrine of severability applicable to such an amendment
so that amendments made in the First and Fourth Schedules may
be upheld while declaring the amendments in the other provisions
as ineffective? A contrary view excluding the doctr ine of
severability would result in elevating a procedural limitation on
the amending power to a level higher than the substan tive
limitations.
xxx xxx xxx
75. ….The same principle would, therefore, apply while
considering the validity of a composite amendment which makes
alterations in the First and Fourth Schedules as well a s in other
provisions of the Constitution requiring special majority under
Article 368(2) and such a law, even though passed by the simple
majority and not by special majority, may be upheld in respect of
the amendments made in the First and Fourth Schedules. There is
really no difference in principle between the condition requiring
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
passing of the Bill by a special majority before its presentation to
the President for assent contained in Article 368(2) and the
condition for ratification of the amendment by the legislatures of
not less than one-half of the States before the Bill is presented to
the President for assent contained in the proviso. The principle of
severability can be equally applied to a composite amendme nt
which contains amendments in provisions which do not require
ratification by States as well as amendment in provisions which
require such ratification and by application of the doctrin e of
severability, the amendment can be upheld in respect of the
amendments which do not require ratification and which are within
the competence of Parliament alone. Only these amendments in
provisions which require ratification under the proviso need to be
struck down or declared invalid.
76. The test of severability requires the Court to ascertain whether
the legislature would at all have enacted the law if the s evered
part was not the part of the law and whether after sever ance
what survives can stand independently and is workable. If the
provisions of the Tenth Schedule are considered in the background
of the legislative history, namely, the report of the ‘Committee on
Defections’ as well as the earlier Bills which were moved to curb
the evil of defection it would be evident that the main pur pose
underlying the constitutional amendment and introduction of the
Tenth Schedule is to curb the evil of defection which was causing
immense mischief in our body politic. The ouster of jurisdiction of
courts under Paragraph 7 was incidental to and to lend strength to
the main purpose which was to curb the evil of defection. It cannot
be said that the constituent body would not have enacted the other
provisions in the Tenth Schedule if it had known that Paragraph 7
was not valid. Nor can it be said that the rest of the provisions of
the Tenth Schedule cannot stand on their own even if Paragraph
7 is found to be unconstitutional. The provisions of Paragraph 7
can, therefore, be held to be severable from the res t of the
provisions.
77. We accordingly hold on contentions (C) and (D):
That there is nothing in the said proviso to Article 368(2) which
detracts from the severability of a provision on account of the
inclusion of which the Bill containing the amendment requires
531
ratification from the rest of the provisions of such Bill which do
not attract and require such ratification. Having regard t o the
mandatory language of Article 368(2) that ‘thereupo n the
Constitution shall stand amended’ the operation of the proviso
should not be extended to constitutional amendments in a Bill which
can stand by themselves without such ratification.
That accordingly, the Constitution (Fifty-second Amendment) Act,
1985, insofar as it seeks to introduce the Tenth Schedule in the
Constitution of India, to the extent of its provisions which are
amenable to the legal-sovereign of the amending process of th e
Union Parliament cannot be overborne by the proviso which cannot
operate in that area. There is no justification for the view that
even the rest of the provisions of the Constitution (Fifty-second
Amendment) Act, 1985, excluding Paragraph 7 of the Tent h
Schedule become constitutionally infirm by reason alone of the
fact that one of its severable provisions which attra cted and
required ratification under the proviso to Article 368(2) was not
so ratified.
That Paragraph 7 of the Tenth Schedule contains a provision which
is independent of, and stands apart from, the main provisions of
the Tenth Schedule which are intended to provide a remedy for
the evil of unprincipled and unethical political defections and,
therefore, is a severable part. The remaining provisions of the
Tenth Schedule can and do stand independently of Paragraph 7
and are complete in themselves workable and are not trunca ted
by the excision of Paragraph 7.
76. Article 243ZR of Part IXB makes it clear that all the provisions
of this Part which apply to multi-State co-operative societies would apply
subject to the modification that any reference to a “Legisl ature of a
State, State Act or State Government” shall be construed as a reference
to “Parliament, Central Act or the Central Government” res pectively.
The learned Attorney General therefore argued that instead of having
two separate parts within Part IXB, one dealing with State co-operative
societies and one dealing with multi-State co-operative soc ieties, the
well-known legislative device of “reference” to existing provisions was
instead utilised by Article 243ZR and that therefore we should view the
matter as if a separate part within Part IXB has been enacted insofar as
multi-State co-operative societies are concerned.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
77. There is substance in this argument. In Kihoto Hollohan
(supra), it was held that a composite amendment that was presented to
the President for his assent, one part of the amendm ent requiring
ratification from the States and the other not requiring ratification, was
severable, as a result of which Paragraph 7 alone of the 10th Schedule
of the Constitution was struck down for want of ratification by the States.
There can be no doubt that in its application to multi-State co-operative
societies, neither Article 246(3) nor Entry 32 List II of the 7th Schedule
would be attracted. Equally, the test of severability laid down in Kihoto
Hollohan (supra) which required the court in that case to ascertain
whether the legislature would at all have enacted the law if the severed
part was not part of the law cannot be said to apply in a case like the
present where, had the amendment dealing with multi-State co-operative
societies been in a separate part of Part IXB, such test would be
inapplicable. The Statement of Objects and Reasons for the Constitution
97th Amendment Act makes this clear. It states:
“The proposed new Part in the Constitution, inter alia, s eeks to
empower the Parliament in respect of multi-State coope rative
societies and the State Legislatures in cases of other co-operative
societies to make appropriate law, laying down the foll owing
matters, namely:-”
(Emphasis supplied)
It is clear, therefore, that the Scheme qua multi-State cooperative
societies is separate from the Scheme dealing with “other cooperative
societies”, Parliament being empowered, so far as multi-State cooperative
societies are concerned, and the State legislatures having to make
appropriate laws laying down certain matters so far as “other cooperative
societies” are concerned. The effect of Article 246ZR is as if multi-
State co-operative societies are separately dealt with in a separate sub-
chapter contained within Part IXB, as is correctly con tended by the
learned Attorney General. Also, there is no doubt that after severance
what survives can and does stand independently and is workable. It was
faintly suggested by learned counsel for the Respondent s that the
consequence of this Court holding that the Constitution 97th Amendment
Act is void for want of ratification would render the entire amendment
still-born, as a result of which no part of the amendment can survive.
We reject this argument for two reasons. If the doctrine of severability
were not to apply for the afore-stated reason, then the majority judgment
533
in Kihoto Hollohan (supra) would be incorrect. This very reasoning
would then render the entire Constitution 52nd Amendment, which inserted
the Tenth Schedule to the Constitution of India, constitutionally infirm as
then the entirety of the amendment would have to be declared void for
want of ratification, which would be in the teeth of the majority judgment
in Kihoto Hollohan(supra). Further, on this reasoning, the amendments
made in Article 19 and the addition of Article 43B would also have to be
struck down, which was not pleaded or argued before either the High
Court or before us. This being the case, we declare that Part IXB of the
Constitution of India is operative insofar as multi-State co- operative
societies are concerned.
78. The other argument of the learned Attorney General that under
Article 243ZS in its application to Union territories the sa me situation
would prevail as the application of Article 243ZR is not quit e correct.
There can be no doubt that Article 246(3) does not apply to Union
territories. Instead, Article 246(4) applies to Union territories, by means
of which Parliament can use the State List also to legislate insofar as the
Union territories are concerned. However, given the truncation of Entry
32 List II of the 7th Schedule by Part IXB, what would operate in Union
territories is Part IXB only insofar as it applies to multi-State co-operative
societies. So far as co-operative societies within a Uni on territory are
concerned, the same infirmity as is found in the main part of the judgment
continues insofar as the legislative subject “co-operati ve societies” is
concerned under Entry 32 List II. Therefore, for co-operative societies
which have no ramifications outside the Union territory itself, Part IXB
will have no application.
79. We now come to the argument of Shri Shah that even so far
as multi-State co-operative societies are concerned, since Entry 44 List
I gets truncated in the same manner as Entry 32 List II, the Constitutional
Amendment would require ratification so far as multi-State co-operative
societies are concerned since a change in effect is made in List I, which
would be covered by clause (c) of the proviso to Article 368 of the
Constitution. On a reading of the writ petition filed before the High Court,
no such ground has been raised. On the contrary, all the grounds raised
have reference to infraction of the federal principle and the fact that the
subject “co-operative societies” is affected by the amendment needing
ratification. Though the prayer to the writ petition may be to strike down
the entirety of Part IXB, no ground having been raised and no argument
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
either having been raised on this score before the High Court, we need
not deal with this argument of Shri Shah.
80. The judgment of the High Court is upheld except to the extent
that it strikes down the entirety of Part IXB of the Constitution of India.
As held by us above, it is declared that Part IXB of the Constitution of
India is operative only insofar as it concerns multi-Stat e co-operative
societies both within the various States and in the Union ter ritories of
India. The appeals are accordingly disposed of.
K. M. JOSEPH, J.
1. I have gone through the draft Judgment authored by my learned
and esteemed Brother Justice Rohinton Fali Nariman.
2. I am in complete agreement with the reasoning and conclusion
in regard to the provisions relating to Article 240ZI to Article 243ZQ and
Article 243ZT, being unconstitutional for non-compliance, wi th the
mandate of the proviso to Article 368(2) of the Constitution of India.
However, I regret my inability to concur with the view ta ken that the
Doctrine of Severability will apply to sustain Article 243ZR and Article
243ZS to the multistate cooperative societies operating in the Union
Territories, and that, it would not apply to cooperative societies confined
to the territories of the Union Territories.
3. Part IXB of the Constitution of India came to be inserted by
the Ninety-Seventh Amendment to the Constitution.
4. The High Court has found the Articles 243ZH to 24 3ZT
unconstitutional. The other parts of the Ninety-Seventh Amendment were
found not to be affected. The ground was essentially that there was no
ratification as required under the proviso to Article 368(2). It is also
found to be in breach of the basic structure of the Constitution. In three
of the Appeals, the writ petitioners challenged Show Cause Notices and
subsequent decision based on the same and the Writ Petitions were filed
based on the Ninety-Seventh Amendment. It is necessary to re fer to
Part IXB:
“PART IXB
THE CO-OPERATIVE SOCIETIES
243ZH. Definitions.—In this Part, unless the context otherwise
requires,—
535
(a) “authorised person” means a person referred to as such in
article 243ZQ;
(b) “board” means the board of directors or the governing body
of a co-operative society, by whatever name called, to which
the direction and control of the management of the affairs of a
society is entrusted to;
(c) “co-operative society” means a society register ed or
deemed to be registered under any law relating to co-operative
societies for the time being in force in any State;
(d) “multi-State co-operative society” means a society w ith
objects not confined to one State and registered or deemed to
be registered under any law for the time being in force relating
to such cooperatives;
(e) “Office bearer” means a President, Vice-Preside nt,
Chairperson, Vice-Chairperson, Secretary or Treasurer, of a
co-operative society and includes any other person to be elected
by the board of any cooperative society;
(f) “Registrar” means the Central Registrar appointed by the
Central Government in relation to the multi-State co-operative
societies and the Registrar for co-operative societies appointed
by the State Government under the law made by the Legislature
of a State in relation to co-operative societies;
(g) “State Act” means any law made by the Legislature of a
State;
(h) “State level co-operative society” means a co-oper ative
society having its area of operation extending to the whole of a
State and defined as such in any law made by the Legislature
of a State.
243ZI. Incorporation of co-operative societies.—Subject to t he
provisions of this Part, the Legislature of a State may, by law,
make provisions with respect to the incorporation, regulation and
winding up of co-operative societies based on the principl es of
voluntary formation, democratic member-control, mem ber-
economic participation and autonomous functioning.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
243ZJ. Number and term of members of board and its office
bearers.—(1) The board shall consist of such number of directors
as may be provided by the Legislature of a State, by law:
Provided that the maximum number of directors of a co-operative
society shall not exceed twenty-one:
Provided further that the Legislature of a State shall, by law, provide
for the reservation of one seat for the Scheduled Castes or the
Scheduled Tribes and two seats for women on board of every co-
operative society consisting of individuals as members and having
members from such class of category of persons.
(2) The term of office of elected members of the board and its
office bearers shall be five years from the date of elec tion and
the term of office bearers shall be coterminous with the t erm of
the board:
Provided that the board may fill a casual vacancy on the board by
nomination out of the same class of members in respect of which
the casual vacancy has arisen, if the term of office of the board is
less than half of its original term.
(3) The Legislature of a State shall, by law, make provisions for
co-option of persons to be members of the board having experience
in the field of banking, management, finance or specialisation in
any other field relating to the objects and activities undertaken by
the co-operative society, as members of the board of such society:
Provided that the number of such co-opted members shall
not exceed two in addition to twenty-one directors specified in
the first proviso to clause (1):
Provided further that such co-opted members shall not have
the right to vote in any election of the cooperative society in their
capacity as such member or to be eligible to be elected as office
bearers of the board:
Provided also that the functional directors of a co-operative
society shall also be the members of the board and such members
shall be excluded for the purpose of counting the total number of
directors specified in the first proviso to clause (1).
243ZK. Election of members of board.—(1)
Notwithstanding anything contained in any law made by the
537
Legislature of a State, the election of a board shall be conducted
before the expiry of the term of the board so as to ensure that the
newly elected members of the board assume office immediately
on the expiry of the term of the office of members of the outgoing
board.
(2) The superintendence, direction and control of th e
preparation of electoral rolls for, and the conduct of, all elections
to a co-operative society shall vest in such an authority or body,
as may be provided by the Legislature of a State, by law: Provided
that the Legislature of a State may, by law, provide for the
procedure and guidelines for the conduct of such elections.
243ZL. Supersession and suspension of board and interim
management.—(1) Notwithstanding anything contained in any law
for the time being in force, no board shall be superseded or kept
under supersession for a period exceeding six months:
Provided that the board may be superseded or kept under
suspension in a case—
(i) of its persistent default; or
(ii) of negligence in the performance of its duties; or
(iii) the board has committed any act prejudicial to the
interests of the co-operative society or its members; or
(iv) there is stalemate in the constitution or functions of the
board; or
(iv) the authority or body as provided by the Legislature of a
State, by law, under clause (2) of article 243ZK, has
failed to conduct elections in accordance with the
provisions of the State Act:
Provided further that the board of any such co-operative
society shall not be superseded or kept under suspension whe re
there is no Government shareholding or loan or financial assistance
or any guarantee by the Government:
Provided also that in case of a co-operative society carrying
on the business of banking, the provisions of the B anking
Regulation Act, 1949 shall also apply:
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
Provided also that in case of a co-operative society, other
than a multi- State co-operative society, carrying on the business
of banking, the provisions of this clause shall have the effect as if
for the words “six months”, the words “one year” had bee n
substituted.
(2) In case of supersession of a board, the administrator
appointed to manage the affairs of such cooperative society shall
arrange for conduct of elections within the period specified in
clause (1) and hand over the management to the elected board.
(3) The Legislature of a State may, by law, make provisions
for the conditions of service of the administrator.
243ZM. Audit of accounts of co-operative societies.—(1)
The Legislature of a State may, by law, make provisions with
respect to the maintenance of accounts by the co-op erative
societies and the auditing of such accounts at least once in each
financial year.
(2) The Legislature of a State shall, by law, lay down the
minimum qualifications and experience of auditors and auditing
firms that shall be eligible for auditing accounts of the co-operative
societies.
(3) Every co-operative society shall cause to be audited by
an auditor or auditing firms referred to in clause (2) appointed by
the general body of the co-operative society: Provided that such
auditors or auditing firms shall be appointed from a panel approved
by a State Government or an authority authorised by the State
Government in this behalf.
(4) The accounts of every co-operative society shall be
audited within six months of the close of the financial year to
which such accounts relate.
(5) The audit report of the accounts of an apex co-operative
society, as may be defined by the State Act, shall be lai d before
the State Legislature in the manner, as may be provided by the
State Legislature, by law.
243ZN. Convening of general body meetings.—The
Legislature of a State may, by law, make provisions that the annual
general body meeting of every co-operative society sha ll be
539
convened within a period of six months of close of the financial
year to transact the business as may be provided in such law.
243ZO. Right of a member to get information.—(1) The
Legislature of a State may, by law, provide for acces s to every
member of a co-operative society to the books, information and
accounts of the cooperative society kept in regular transaction of
its business with such members.
(2) The Legislature of a State may, by law, make provisions
to ensure the participation of members of the management of the
co-operative society providing minimum requirement of attending
meetings by the members and utilising the minimum level of
services as may be provided in such law.
(3) The Legislature of a State may, by law, provide for co-
operative education and training for its members.
243ZP. Returns.—(1) Every co-operative society shall file
returns, within six months of the close of every financial year, to
the authority designated by the State Government including the
following matters, namely:—
(a) annual report of its activities;
(b) its audited statement of accounts;
(c) plan for surplus disposal as approved by the general body
of the co-operative society;
(d) list of amendments to the bye-laws of the co-operative
society, if any;
(e) declaration regarding date of holding of its general bo dy
meeting and conduct of elections when due; and
(f) any other information required by the Registrar in pursuance
of any of the provisions of the State Act.
243ZQ. Offences and penalties.—(1) The Legislature of a State
may, by law, make provisions for the offences relating to the
co-operative societies and penalties for such offences.
(2) A law made by the Legislature of a State under clause (1)
shall include the commission of the following act or omission
as offences, namely:—
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
(a) a co-operative society or an officer or member ther eof
wilfully makes a false return or furnishes false information, or
any person wilfully not furnishes any information required from
him by a person authorised in this behalf under the provisions
of the State Act;
(b) any person wilfully or without any reasonable excus e
disobeys any summons, requisition or lawful written order issued
under the provisions of the State Act;
(c) any employer who, without sufficient cause, fails to pay to
a co-operative society amount deducted by him from its
employee within a period of fourteen days from the date on
which such deduction is made;
(d) any officer or custodian who wilfully fails to handover
custody of books, accounts, documents, records, cash, security
and other property belonging to a co-operative society of which
he is an officer or custodian, to an authorised person; and
(e) whoever, before, during or after the election of membe rs
of the board or office bearers, adopts any corrupt practice .
243ZR. Application to multi-State co-operative societies.—The
provisions of this Part shall apply to the multi-State co-operative
societies subject to the modification that any referenc e to
“Legislature of a State”, “State Act or State Government” shall
be construed as a reference to “Parliament”, “Central Act” or
“the Central Government” respectively.
243ZS. Application to Union territories.—The provisions of
this Part shall apply to the Union territories and shall, in their
application to a Union territory, having no Legislative Assembly
as if the references to the Legislature of a State were a
reference to the administrator thereof appointed under article
239 and, in relation to a Union territory having a Legislative
Assembly, to that Legislative Assembly:
Provided that the President may, by notification in the Official
Gazette, direct that the provisions of this Part shall not apply to
any Union territory or part thereof as he may specify in the
notification.
243ZT. Continuance of existing laws.— Notwithstanding
anything in this Part, any provision of any law relating to co-
541
operative societies in force in a State immediately before the
commencement of the Constitution (Ninety-seventh
Amendment) Act, 2011, which is inconsistent with the provisions
of this Part, shall continue to be in force until amended or
repealed by a competent Legislature or other compete nt
authority or until the expiration of one year from such
commencement, whichever is less.”
5. Article 243ZH is the definition clause. It is clear that the
provisions contained in Articles 243ZI to 243ZQ and Article 243ZT are
all meant to apply in regard to cooperative societies, which are born
under laws made by the State Legislature. It is beyond the pale of doubt
that the legislative powers of the State Legislatur e, in regard to
“cooperative societies”, falling in Entry 32 of List II of the Seventh
Schedule, has been conditioned, cribbed and confined, though no change,
as such, is made in the Entry 32. It is clear that what is r elevant is,
whether by direct or indirect means, there is a substantive impact on the
provisions covered by the proviso to Article 368(2). There is also a
clear impact on Article 246(3), which deals with the exclusive powers of
the State Legislature and, therefore, there is a change brought about in
regard to the provisions contained in Chapter I of P art XI of the
Constitution, which is contained in clause (b) to the proviso of Article
368(2).
6. Having found that these provisions cannot survive, the question
arises whether Article 243ZR and 243ZS, can continue to exist. What is
pressed into service, however, in this regard, by learned Attorney General,
is that the Doctrine of Severability would apply.
7. The learned Attorney General has contended that Parliament,
vide Article 243ZR, has dealt with multistate cooperative soc ieties, in
regard to which, it has exclusive legislative competence and, instead of
duplicating the provisions, the device of reference is utilised and Article
243ZR really manifests Parliaments resolve to apply the very same
provisions as was intended for cooperative societies covered by Entry
32 of List II, viz., cooperative societies made under a law passed by the
State Legislature. It would be no different, if, instead of words used in
Article 243ZR and 243ZS, the entire provisions, were repeated all over
again. The Principle of Legislation by Adoption is pressed into service
by the learned Attorney General.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
8. The learned Counsel appearing on behalf of the Respondent
No. 1, Shri Massoom K. Shah, and also, Ms. Ritika Sinha, for the
Intervenors, would point out, having regard to the arrangement of the
provisions and the wording used in Article 243ZR and Article 243ZS,
there can be no scope for applying the Doctrine of Severability.
9. It is the case of Shri P.K. Jani, learned Senior Counsel for the
appellant in one of the cases that the amendment was preceded by a
very elaborate exercise, which is that, there was a meet of Ministers of
Cooperation of various States and resolutions were pas sed [These
Resolutions are not to be mistaken for the Resolutions to be passed by
the State Legislatures, as contemplated in the proviso to Article 368(2)].
It is contended on behalf of the Respondent No. 1 and the learned Counsel
for the Intervenors that it may have been different, if t he substantial
provisions, as contained in Article 243ZI to 243ZQ, which rela ted to
cooperative societies, embraced by Entry 32 of List II, were ex pressly
enacted to apply to multistate cooperative societies and to the cooperative
societies operating in the Union Territory, and thereafter, such provisions
were also made to apply to cooperative societies operating u nder laws
made by the State Legislatures but this is not the position.
10. The Doctrine of Severability came up for consideration in
R.M.D. Chamarbaugwalla and another v. Union of Indi a and
another1. Therein, this Court has laid down certain Rules in this regard.
They read as follows:
“22. That being the position in law, it is now necessary to consider
whether the impugned provisions are severable in their application
to competitions of a gambling character, assuming of course that
the definition of “prize competition” in Section 2(d) is wide enough
to include also competitions involving skill to a substantial degree.
It will be useful for the determination of this question to refer to
certain rules of construction laid down by the American courts ,
where the question of severability has been the sub ject of
consideration in numerous authorities. They may be summarised
as follows:
1. In determining whether the valid parts of a statute are
separable from the invalid parts thereof, it is the intention
of the legislature that is the determining factor. The test
1 AIR 1957 SC 628
543
to be applied is whether the legislature would have
enacted the valid part if it had known that the rest of
the statute was invalid. Vide Corpus Juris Secundum,
Vol. 82, p. 156; Sutherland on Statutory Construction,
Vol. 2 pp. 176-177.
2. If the valid and invalid provisions are so inextricably
mixed up that they cannot be separated from one another,
then the invalidity of a portion must result in the invalidity
of the Act in its entirety. On the other hand, if they are
so distinct and separate that after striking out what is
invalid, what remains is in itself a complete code
independent of the rest, then it will be upheld
notwithstanding that the rest has become unenforceable.
Vide Cooley’s Constitutional Limitations, Vol. I at pp.
360-361; Crawford on Statutory Construction , pp.
217-218.
3. Even when the provisions which are valid are distinct
and separate from those which are invalid, if they all
form part of a single scheme which is intended to be
operative as a whole, then also the invalidity of a part
will result in the failure of the whole. Vide Crawford
on Statutory Construction , pp. 218-219.
4. Likewise, when the valid and invalid parts of a statute
are independent and do not form part of a scheme but
what is left after omitting the invalid portion is so thin
and truncated as to be in substance different from what
it was when it emerged out of the legislature, then also
it will be rejected in its entirety.
5. The separability of the valid and invalid provisions of a
statute does not depend on whether the law is enacted
in the same section or different sections; (Vide Cooley’s
Constitutional Limitations , Vol. I, pp. 361-362); it is
not the form, but the substance of the matter that is
material, and that has to be ascertained on an
examination of the Act as a whole and of the setting of
the relevant provision therein.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
6. If after the invalid portion is expunged from the statute
what remains cannot be enforced without making
alterations and modifications therein, then the whole of
it must be struck down as void, as otherwise it will
amount to judicial legislation. Vide Sutherland on
Statutory Construction, Vol. 2, p. 194.
7. In determining the legislative intent on the question of
separability, it will be legitimate to take into account the
history of the legislation, its object, the title and the
preamble to it. Vide Sutherland on Statutory
Construction, Vol. 2, pp. 177-178.”
11. We are, in this case, concerned with a case of an amendment
to the Constitution, which has been carried out under Article 368. Article
368 reads as follows:
“368. Power of Parliament to amend the Constitution and procedure
therefor.—
(1) Notwithstanding anything in this Constitution, Parliament may
in exercise of its constituent power amend by way of additi on,
variation or repeal any provision of this Constitution in accordance
with the procedure laid down in this article.
(2) An amendment of this Constitution may be initiated only by
the introduction of a Bill for the purpose in either House of
Parliament, and when the Bill is passed in each House by a majority
of the total membership of that House and by a majority of not
less than two-thirds of the members of that House present a nd
voting, it shall be presented to the President who shall giv e his
assent to the Bill and thereupon the Constitution shall stand
amended in accordance with the terms of the Bill:
Provided that if such amendment seeks to make any change in—
(a) article 54, article 55, article 73, article 162, article 241 or
article 279A or
(b) Chapter IV of Part V, Chapter V of Part VI, or Chapt er I
of Part XI, or
(c) any of the Lists in the Seventh Schedule, or
(d) the representation of States in Parliament, or
545
(e) the provisions of this article, the amendment shall also
require to be ratified by the Legislatures of not less t han
one-half of the States by resolutions to that effect pass ed
by those Legislatures before the Bill making provision for
such amendment is presented to the President for assent.
(3) Nothing in article 13 shall apply to any amendment made under
this article.
(4) No amendment of this Constitution (including the provisions
of Part III) made or purporting to have been made under th is
article whether before or after the commencement of section 55
of the Constitution (Forty-second Amendment) Act, 1976] shall
be called in question in any court on any ground.
(5) For the removal of doubts, it is hereby declared that t here
shall be no limitation whatever on the constituent p ower of
Parliament to amend by way of addition, variation or repeal the
provisions of this Constitution under this article.”
12. Article 368 has provided for the procedure to be followed by
Parliament, when it purports to amend the Constitution. There are two
limitations broadly on the power of Parliament to amend the Constitution:
(i) Parliament must scrupulously follow the procedur e provided
in Article 368;
(ii) There is also the substantive limitation on power of the
Parliament to amend the Constitution, which is far too well
established to require support from case law, viz., that
Parliament cannot amend the Constitution by breaching its
basic features.
13. In this case, the provisions of Article 243ZI to 243ZQ a nd
Article 243ZT are undoubtedly afflicted with the vice of non-compliance
with the procedure, which is mandatory. Resultantly, the said provisions
must be treated as still born. These provisions are void in law. The
definition clause Article 243ZH clearly would have no meaning and would
cease to be workable. The only question, which, therefore, a rises is
when provisions of the amendment to the Constitution are found to be
void, for the reason that the mandate of the proviso to Article 368(2)
has not been complied with, whether the Doctrine of Severability could
be applied to sustain the other provisions, which may not require
Parliament to follow the procedure under the proviso to Article 368(2).
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
14. This question is not res integra as it has been considered by
the Constitution Bench of this Court in Kihoto Hollohan v. Zachillhu
and others2. The Court in the said case, was dealing with a challenge to
the Tenth Schedule to the Constitution. Parliament, by virtue of the Tenth
Schedule purported to deal with the evil of defection. After providing for
various aspects, it also purported to oust the jurisdiction of all courts by
virtue of paragraph-7, which reads as follow:
“7. Bar of jurisdiction of courts: Notwithstanding anything in this
Constitution, no court shall have any jurisdiction in respect of any
matter connected with the disqualification of the Member of a
House under this Schedule.”
15. The Court proceeded to uphold the provisions of the Tenth
Schedule except paragraph-7. In doing so, this Court invoked the theory
of Severability. It is, in this context, necessary to notice th e following
discussion:
“66. While examining the constitutional validity of laws the
principle that is applied is that if it is possible to construe a statute
so that its validity can be sustained against a constitutional attack
it should be so construed and that when part of a statute is valid
and part is void, the valid part must be separated from the invalid
part. This is done by applying the doctrine of severabilit y. The
rationale of this doctrine has been explained by Cooley in the
following words: [ Cooley: Constitutional Limitations, (8th edn.)
Vol. I pp. 359-60.]
“It will sometimes be found that an act of the legislature is
opposed in some of its provisions to the Constitution, while others,
standing by themselves, would be unobjectionable. So the forms
observed in passing it may be sufficient for some of the purposes
sought to be accomplished by it, but insufficient for others. In any
such case the portion which conflicts with the Constitution, or in
regard to which the necessary conditions have not been observed,
must be treated as a nullity. Whether the other parts of the statute
must also be adjudged void because of the association must depend
upon a consideration of the object of the law, and in what manner
and to what extent the unconstitutional portion aff ects the
remainder. A statute, it has been said, is judicially held t o be
2 (1992) Suppl.2 SCC 651
547
unconstitutional, because it is not within the scope of legislative
authority; it may either propose to accomplish something prohibited
by the Constitution, or to accomplish some lawful, and ev en
laudable object, by means repugnant to the Constitution of the
United States or of the State. A statute may contain some su ch
provisions, and yet the same act, having received the sanction of
all branches of the legislature, and being in the form of law, may
contain other useful and salutary provisions, not obnoxious to any
just constitutional exception. It would be inconsistent with all just
principles of constitutional law to adjudge these enactments void
because they are associated in the same act, but not connect ed
with or dependent on others which are unconstitutional.”
xxx xxx xxx
68. The doctrine of severability has been applied by this
Court in cases of challenge to the validity of an amendment on
the ground of disregard of the substantive limitations on the
amending power, namely, alteration of the basic structure. But
only the offending part of the amendment which had the effect of
altering the basic structure was struck down while the rest of the
amendment was upheld. [See Kesavananda Bharati v. State of
Kerala [(1973) 4 SCC 225 : 1973 Supp SCR 1] , Minerva Mills
Ltd. v. Union of India [(1980) 3 SCC 625 : (1981) 1 SCR 206]
, P. Sambamurthy v. State of A.P. [(1987) 1 SCC 362 : (1987) 2
ATC 502 : (1987) 1 SCR 879] ].
69. Is there anything in the procedural limitations imposed
by sub-article (2) of Article 368 which excludes the doctrine of
severability in respect of a law which violates the said limitations?
Such a violation may arise when there is a composite Bill or what
is in statutory context or jargon called a ‘Rag-Bag’ mea sure
seeking amendments to several statutes under one amendi ng
measure which seeks to amend various provisions of the
Constitution some of which may attract clauses (a) to (e) of the
proviso to Article 368(2) and the Bill, though passed by the requisite
majority in both the Houses of Parliament has received the assent
of the President without it being sent to States for ratification or
having been so sent fails to receive such ratification from not less
than half the States before the Bill is presented for as sent. Such
an Amendment Act is within the competence of Parliament insofar
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
as it relates to provisions other than those mentioned in cl auses
(a) to ( e) of proviso to Article 368(2) but in respect of the
amendments introduced in provisions referred to in clauses (a) to
(e) of proviso to Article 368(2), Parliament alone is not competent
to make such amendments on account of some constitutionally
recognised federal principle being invoked. If the doctrin e of
severability can be applied it can be upheld as valid in respect of
the amendments within the competence of Parliament and on ly
the amendments which Parliament alone was not competent to
make could be declared invalid.
70. Is there anything compelling in the proviso to Article
368(2) requiring it to be construed as excluding the doctrine of
severability to such an amendment? It is settled rule of statutory
construction that “the proper function of a proviso is to ex cept
and deal with a case which would otherwise fall within the general
language of the main enactment, and its effect is confined to that
case” and that where “the language of the main enactment i s
clear and unambiguous, a proviso can have no repercussion on
the interpretation of the main enactment, so as to exclude from it
by implication what clearly falls within its expres s terms”.
[See: Madras & Southern Mahratta Railway Company
Ltd. v. Bezwada Municipality [(1944) 71 IA 113, 122 : AIR 1944
PC 71 : 48 CWN 618] , CIT v. Indo-Mercantile Bank Ltd. [1959
Supp 2 SCR 256, 266 : AIR 1959 SC 713 : (1959) 36 ITR 1]
71. The proviso to Article 368(2) appears to have been
introduced with a view to giving effect to the federal principle. In
the matter of amendment of provisions specified in clauses (a) to
(e) relating to legislative and executive powers of the States vis-
a-vis the Union, the Judiciary, the election of the Presi dent and
the amending power itself, which have a bearing on the Stat es,
the proviso imposes an additional requirement of ratificatio n of
the amendment which seeks to effect a change in those provisions
before the Bill is presented for the assent of the Preside nt. It is
salutary that the scope of the proviso is confined to the lim its
prescribed therein and is not construed so as to take away the
power in the main part of Article 368(2). An amendment which
otherwise fulfils the requirements of Article 368(2) and is outside
the specified cases which require ratification cannot b e denied
549
legitimacy on the ground alone of the company it keeps. The main
part of Article 368(2) directs that when a Bill which ha s been
passed by the requisite special majority by both the House s has
received the assent of the President “the Constitution shall stand
amended in accordance with the terms of the Bill”. The proviso
cannot have the effect of interdicting this constitutional declaration
and mandate to mean that in a case where the proviso has not
been complied — even the amendments which do not fall within
the ambit of the proviso also become abortive. The words “the
amendment shall also require to be ratified by the legislature”
indicate that what is required to be ratified by the legislatures of
the States is the amendment seeking to make the change i n the
provisions referred to in clauses ( a) to (e) of the proviso. The
need for and the requirement of the ratification is confined to that
particular amendment alone and not in respect of amendments
outside the ambit of the proviso. The proviso can have, therefore,
no bearing on the validity of the amendments which do not f all
within its ambit. Indeed the following observations of this Court
in Sajjan Singh case [(1965) 1 SCR 933 : AIR 1965 SC 845]
are apposite: (SCR p. 940)
“In our opinion, the two parts of Article 368 must on a
reasonable construction be harmonised with each other in the sense
that the scope and effect of either of them should not be allowed
to be unduly reduced or enlarged.”
xxx xxx xxx
73. A similar situation can arise in the context of the main
part of Article 368(2) which provides: “when the Bill is passed in
each House by a majority of the total membership of that House
and by a majority of not less than two-thirds of the Members of
that House present and voting, it shall be presented to the
President”. Here also a condition is imposed that the Bill shall be
presented to the President for his assent only after it ha s been
passed in each House by the prescribed special majority . An
amendment in the First and Fourth Schedules referable to Article
4 can be introduced by Parliament by an ordinary law passed by
simple majority. There may be a Bill which may cont ain
amendments made in the First and Fourth Schedules as well as
amendments in other provisions of the Constitution excluding those
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
referred to in the proviso which can be amended only by a special
majority under Article 368(2) and the Bill after having been passed
only by an ordinary majority instead of a special majority has
received the assent of the President. The amendments which are
made in the First and Fourth Schedules by the said Amendm ent
Act were validly made in view of Article 4 but the amendments in
other provisions were in disregard to Article 368(2) which requires
a special majority. Is not the doctrine of severability applicable to
such an amendment so that amendments made in the First and
Fourth Schedules may be upheld while declaring the amendments
in the other provisions as ineffective? A contrary view excluding
the doctrine of severability would result in elevating a procedural
limitation on the amending power to a level higher th an the
substantive limitations.
xxx xxx xxx
75. In that case, it was found that Section 41 of the Bribery
Amendment Act, 1958 made a provision for appointment of a
panel by the Governor-General on the advice of the Minister of
Justice for selecting members of the Bribery Tribunal while Section
55 of the Constitution vested the appointment, transfer, dismissal
and disciplinary control of judicial officers in the Judicial Service
Commission. It was held that the legislature had purported to pass
a law which, being in conflict with Section 55 of the Orde r in
Council, must be treated, if it is to be valid, as an implied alteration
of the constitutional provisions about the appointment of judicial
officers and could only be made by laws which comply with the
special legislative procedure laid down in Section 29(4). Si nce
there was nothing to show that the Bribery Amendment Act, 1951
was passed by the necessary two-thirds majority, it was held that
“any Bill which does not comply with the condition precedent of
the proviso, is and remains, even though it receives the Roya l
Assent, invalid and ultra vires”. Applying the doctrine of severability
the Judicial Committee, however, struck down the offendi ng
provision, i.e. Section 41 alone. In other words passing of the Bill
by a special majority was the condition precedent for presentation
of the Bill for the assent. Disregard of such a condition precedent
for presenting a Bill for assent did not result in the entire enactment
being vitiated and the law being declared invalid in its entirety but
551
it only had the effect of invalidation of a particular provision which
offended against the limitation on the amending pow er. A
comparison of the language used in clause (4) of Section 29 with
that of Article 368(2) would show that both the provisions bear a
general similarity of purpose and both the provisions require the
passing of the Bill by special majority before it was presented for
assent. The same principle would, therefore, apply while
considering the validity of a composite amendment which makes
alterations in the First and Fourth Schedules as well a s in other
provisions of the Constitution requiring special majority under
Article 368(2) and such a law, even though passed by the simple
majority and not by special majority, may be upheld in respect of
the amendments made in the First and Fourth Schedules. There is
really no difference in principle between the condition requiring
passing of the Bill by a special majority before its presentation to
the President for assent contained in Article 368(2) and the
condition for ratification of the amendment by the legislatures of
not less than one-half of the States before the Bill is presented to
the President for assent contained in the proviso. The principle of
severability can be equally applied to a composite amendme nt
which contains amendments in provisions which do not require
ratification by States as well as amendment in provisions which
require such ratification and by application of the doctrin e of
severability, the amendment can be upheld in respect of the
amendments which do not require ratification and which are within
the competence of Parliament alone. Only these amendments in
provisions which require ratification under the proviso need to be
struck down or declared invalid.
76. The test of severability requires the Court to ascertain
whether the legislature would at all have enacted the law i f the
severed part was not the part of the law and whethe r after
severance what survives can stand independently and is workable.
If the provisions of the Tenth Schedule are considered in the
background of the legislative history, namely, the report of the
‘Committee on Defections’ as well as the earlier Bills which were
moved to curb the evil of defection it would be evident that the
main purpose underlying the constitutional amendment and
introduction of the Tenth Schedule is to curb the evil of defection
which was causing immense mischief in our body politic. The
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
ouster of jurisdiction of courts under Paragraph 7 was incidental
to and to lend strength to the main purpose which was to curb the
evil of defection. It cannot be said that the constituent body would
not have enacted the other provisions in the Tenth Schedule if it
had known that Paragraph 7 was not valid. Nor can it be said that
the rest of the provisions of the Tenth Schedule cannot stand on
their own even if Paragraph 7 is found to be unconstitutional. The
provisions of Paragraph 7 can, therefore, be held to be severable
from the rest of the provisions.”
(Emphasis supplied)
16. The first Rule laid down in R.M.D. Chamarbaugwalla (supra)
is that, it is the intention of the Legislature, that is the determining factor.
The test is also laid down that the question to be asked is, wheth er the
Legislature would have enacted the valid Part, if it had known that the
rest of the Statute was invalid. It is apposite to read another Rule, which
is laid down, which is Rule No.7. In determining the legislative intent, it
will be legitimate to take into account, the history of the legislation and
its objects, inter-alia. The Statement of Objects and Reasons for the
Ninety-Seventh Amendment, reads as follows:
“STATEMENT OF OBJECTS AND REASONS
The co-operative sector, over the years, has made significa nt
contribution to various sectors of national economy an d has
achieved voluminous growth. However, it has shown weaknesses
in safeguarding the interests of the members and fulfilment of
objects for which these institutions were organised. There have
been instances where elections have been postponed indefinitely
and nominated office bearers or administrators remaining in-charge
of these institutions for a long time. This reduces the accountability
of the management of co-operative societies to their mem bers.
Inadequate professionalism in management in many of the co-
operative institutions has led to poor services and low productivity.
Co-operatives need to run on well-established democratic principles
and elections held on time and in a free and fair manner. Therefore,
there is a need to initiate fundamental reforms to revitalize these
institutions in order to ensure their contribution in the economic
development of the country and to serve the interests of members
and public at large and also to ensure their autonomy, democratic
functioning and professional management.
553
2. The “co-operative societies” is a subject enumerated in Entry
32 of the State List of the Seventh Schedule of the Constitution
and the State Legislatures have accordingly enacted legislations
on co-operative societies. Within the framework of Stat e Acts,
growth of co-operatives on large scale was envisaged as part of
the efforts for securing social and economic justice and equitable
distribution of the fruits of development. It has, however, be en
experienced that in spite of considerable expansion of co-
operatives, their performance in qualitative terms has not been up
to the desired level. Considering the need for reforms in the Co-
operative Societies Acts of the States, consultations with the State
Governments have been held at several occasions and in the
conferences of State Co-operative Ministers. A strong need has
been felt for amending the Constitution so as to keep the co-
operatives free from unnecessary outside interferences and a lso
to ensure, their autonomous organisational set up an d their
democratic functioning.
3. The Central Government is committed to ensure that the co-
operative societies in the country function in a demo cratic,
professional, autonomous and economically sound manner. With
a view to bring the necessary reforms, it is proposed to incorporate
a new Part in the Constitution so as to provide for certain provisions
covering the vital. aspects of working of co-operative socie ties
like democratic, autonomous and professional functioning. A new
article is also proposed to be inserted in Part IV of the Constitution
(Directive Principles of State Policy) for the States to endeavour
to promote voluntary formation, autonomous function ing,
democratic control and professional management of cooperative
societies. The proposed new Part in the Constitution, i nter alia,
seeks to empower the Parliament in respect of multi-Sta te co-
operative societies and the State Legislatures in case of other co-
operative societies to make appropriate law, laying down t he
following matters, namely:-
(a) provisions for incorporation, regulation arid winding up of co-
operative societies based on the principles of democratic member-
control, member-economic participation and autonomo us
functioning;
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
(b) specifying the maximum number of directors of a co-operative
society to be not exceeding twenty-one members;
(c) providing for a fixed term of five years from the date of election
in respect of the elected members of the board and its off ice
bearers;
(d) providing for a maximum time limit of six months during which
a board of directors of co-operative society could be kept u nder
supersession or suspension;
(e) providing for independent professional audit;
(f) providing for right of information to the members of the co-
operative societies;
(g) empowering the State Governments to obtain periodic reports
of activities and accounts of co-operative societies;
(h) providing for the reservation of one seat for the Schedul ed
Castes or the Scheduled Tribes and two seats for women on the
board of every co-operative society, which have individuals as
members from such categories; (i) providing for offences relating
to co-operative societies and penalties in respect of such offences.
4. It is expected that these provisions will not only ens ure the
autonomous and democratic functioning of co-operatives, but also
ensure the accountability of management to the members and
other stakeholders and shall provide for deterrence for violation
of the provisions of the law.
5. The Bill seeks to achieve the above objectives.”
(Emphasis supplied)
17. From the Statement Objects and Reasons, the following is
discernible.
18. There were weaknesses found in safeguarding the interest s
of the members of the cooperative societies. Election s were being
postponed indefinitely. There was inadequate profes sionalism in
management. It was found that cooperatives needed to be run on well-
established democratic principles and elections had to be held on ti me
and in a free and fair manner. It was further noted that “coope rative
societies” is a subject enumerated in Entry 32 of the State L ist of the
555
Seventh Schedule. That laws were made by the State Legislatures, were
noticed. Reforms, were in short, found necessary in the Cooperat ive
Society Acts of the States. Consultation with the State Gove rnments
were held several times. The Central Government was committed, it is
stated to ensure that the cooperative societies, in the count ry, were to
function in a democratic, professional, autonomous and economicall y
sound manner. It is in this connection that Part IXB was insert ed to
empower Parliament in respect of multistate cooperative societies, and
State Legislatures, in case of other cooperative soci eties, to make
appropriate law.
19. The intention, therefore, discernible was that Parl iament
intended to provide a uniform set of legislative norms and create rights,
liabilities and powers across the board through the length and breadth of
the country. In fact, it was to inform all cooperative societies, whether
they were governed by laws made by the State Legislature s, falling
under Entry 32 of List II of Seventh Schedule, or the appropriate Entry
under List I.
20. In other words, homogeneity was sought to be introduced
without any discrimination between cooperative societies falling within
the legislative domain of State Legislatures and of Parliament. The setting
and the manner, in which the Articles have been ordered in Part IXB,
would go to show that the substantive provisions, wh ich actually
conditioned the legislative power, among other things, was directed against
the State Legislatures.
21. The second Rule laid down in R.M.D. Chamarbaugwalla
(supra) is to enquire whether the valid and invalid provisi ons are so
inextricably mixed up that they cannot be separated from one another. It
is further declared that if the seemingly valid provisions are so distinct
and separate, that after declaring the other set of provisions as invalid,
the remaining provisions would remain a complete Code, independent of
the rest, then, the distinct and separate provisions, which manifests a
complete Code, can become enforceable.
22. The third Rule provides that even if they (the provisions) are
distinct and separate, if they all form part of a single sche me, which is
intended to be operative as a whole, then, also the invalidity of a part,
will result in failure of a whole. In Kihoto Hollohan (supra), this Court,
after bearing in mind the Rules, apparently laid dow n in R.M.D.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
Chamarbaugwalla (supra), has proceeded to clearly articulate (in
paragraph-76) the test, inter-alia, viz., as to whether, after severance,
what survives, can stand independently and is workable.
23. In this regard, it is plain from the Statement of O bjects and
Reasons, that Parliament was fully aware that Entry 32 cl othed the
Legislatures of the State with exclusive legislative power to make laws
in regard to cooperative societies, which were not multistate cooperative
societies. Parliament was fully aware that laws had already been made
by State Legislatures, but yet, the object was to usher in reforms by the
legislative route, and what is more, a Constitutional Amendment, which
clearly involved, a change in regard to the entrenched provis ions. The
Ninety-Seventh Amendment was passed in 2012, several years after
the decision in Kihoto Hollohan (supra). It is clear that the law was
laid down by the Constitution Bench of this Court in Kihoto Hollohan
(supra), that having regard to the sublime purpose behind the proviso to
Article 368(2), which was to foster and secure the federal nature of the
Constitution, what mattered was the substance and not the for m. It
appears to be further clear that an effort was made to take the States on
board by holding several meetings between the States, and what is more,
Resolutions were passed apparently at the meet of State Coope rative
Ministers. All of this appears to point out that, having regard to the law
holding the field and the relevant principles in question, it appears that
Parliament would not have made the amendment, had it known that the
provisions contained in Articles 243ZI to 243ZQ would not pass muster.
The object was clearly to have identical provisions in pl ace to govern
cooperative societies. Uniformity and, in fact, identical treatment for all
cooperative societies whether they are created under Sta te Law or by
Parliament, was the goal.
24. It is true that what the proviso to Article 368(2) contemplates
is, that the ratification by the requisite number of States is done before
the Bill is presented to the President of India for assent.
25. It is the duty of the Court to strive to uphold the law made by
the Legislature. When it comes to an amendment to the Constit ution,
this presumption of constitutionality, and also the duty of t he Court,
becomes even more pronounced. If, indeed, on the Do ctrine of
Severability, the provisions contained in Article 243QR and Article 243QS,
can be sustained, I would agree that the law must survive r ather than
perish. The question, however, is on the terms of the provisions in question
557
(Articles 243QR and 243QS), and bearing in mind the principles, can
they survive on their own, after the invalidation of Article 24 3ZH to
Article 243ZQ and Article 243ZT.
26. In Kihoto Hollohan (supra), it must be noticed that the court
in the said case came to the rescue of Parliament by applying the Doctrine
of Severability and found no difficulty in sustaining the provisions of the
Tenth Schedule, even after jettisoning the provisions of paragraph-7. It
was found that pronouncing the said provision as infirm had no impact
on the workability of the other provisions which related to and provided
for remedies against the evil of defection.
27. The question boils down to this. Are the provisions of Article
243ZR and 243ZS independent provisions and workable? For the sake
of clarity, the provisions are referred in question namely Article 243ZR
and 243ZS.
“243ZR. Application to multi-State co-operative societies. – The
provisions of this Part shall apply to the multi-State co-operative
societies subject to the modification that any refe rence to
“Legislature of a State”, “State Act” or “State Government” shall
be construed as a reference to “Parliament”, “Central Act” or
“the Central Government” respectively.
243ZS. Application to Union territories. – The provisions of this
Part shall apply to the Union territories and shall, in their application
to a Union territory, having no Legislative Assembly as if the
references to the Legislature of a State were a referenc e to the
administrator thereof appointed under article 239 and in, relation
to a Union territory having a Legislative Assembly, to that
Legislative Assembly:
Provided that the President may, by notification in the Off icial
Gazette, direct that the provisions of this Part shall not a pply to
any Union territory or part thereof as he may specify in the
notification.”
28. Both these provisions are entirely dependent upon the provisions
contained in Article 243ZI to 243ZQ. This is for the reason that both
these provisions expressly provide that the ‘provisions of this part’, which
clearly means the foregoing provisions, which are contained in Article
243ZI to 243ZQ, are to apply in regard to multistate cooperative societies
and to Union Territories with the modifications, which are indicated therein.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[K. M. JOSEPH, J.]
There can be application and modifications of something which exists.
There cannot be either, when the elaborate provisions are to be treated
as not born.
29. Are these provisions independent and workable? I will proceed
on the 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 the grundnorm
itself. It would appear to be that these values were to apply, across the
board, to cooperative societies born under laws made by the State
Legislatures, as also, to those made by Parliament.
30. More importantly, once the Court has painted the relev ant
provisions, which are the substantial provisions (Article 243ZI to 243ZQ),
with the brush of unconstitutionality, rendering those provisions, still born,
it would appear that the provisions contained in Article 243ZR and Article
243ZS would not have the crutches without which these provisions cease
to be workable and are impossible to sustain. The unconstitutional part,
which is to be an integral part of Article 243ZR and Article 243ZS, must
continue to exist, if the provisions’, in question, are to bear life. In other
words, to sustain these provisions the court would have to resurrect the
dead provisions contained in Article 243ZI to 243ZQ and Article 243ZT.
The Doctrine of Severability must apply on surer foundations. It is my
view that unless the provisions, which have been found unconstitutional,
are kept alive, Articles 243R and 243ZQ are plainly unworkable.
31. In this view of the matter, I respectfully disagree wi th the
view taken by my learned and esteemed Brother in rega rd to the
application of the Doctrine of Severability.
32. In this view of the matter, the Appeals are dismissed.
Devika Gujral Appeals disposed of.