# UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER

- **Citation:** [2021] 5 S.C.R. 458
- **Court:** Supreme Court of India
- **Decided:** 2021-07-20
- **Case number:** Civil Appeal Nos. 9108-9109 of 2014
- **Bench:** R. F. Nariman, K. M. Joseph, B. R. Gavai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-rajendra-n-shah-and-another-35001
- **Pages:** 101

## Headnote

Constitution (Ninety Seventh Amendment) Act, 2011 -
Challenge to, on procedural grounds - Vires of the Constitution
97th Amendment Act, which inter alia introduced Part IXB (consisting
of Arts.243ZH to 243ZT) under the chapter heading 'The Cooperative Societies' - Whether the constitutional amendment
inserting Part IXB was ultra vires the Constitution for want of
requisite ratification under Art.368(2) proviso - Held: From the
restrictions contained in Part IXB, it is clear that the exclusive
legislative power contained in Entry 32 List II of the 7th Schedule
has been significantly and substantially impacted in that such
exclusive power is now subjected to a large number of curtailments
- By curtailing the width of Entry 32, List II of the 7th Schedule,
Part IXB seeks to effect a significant change in Art.246(3) read
with Entry 32 List II of the 7th Schedule inasmuch as the State's
exclusive power to make laws with regard to the subject of cooperative societies is significantly curtailed thereby directly
impacting the quasi-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
Art.368(2) of the Constitution - Ratification not having been
effected, the Amendment is non-est - The Constitution 97th Amendment
Act is void for want of ratification - Constitution of India - Part
IXB (Arts.243ZH to 243ZT); Art. 368(2) proviso and Schedule VII,
List II, Entry 32 - Co-operative Societies.
Constitution of India, 1950 - Part IXB (consisting of
Arts.243ZH to 243ZT) inserted by the Constitution 97th Amendment
Act and Art.368(2) proviso - Constitutional amendment inserting
Part IXB found to be ultra vires the Constitution for want of requisite
ratification under Art.368(2) proviso - Whether, even if Part IXB is
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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 - Held (per R.F.
Nariman, J. [for himself and B.R. Gavai, J.]) (per majority) - The
Constitution 97th Amendment Act is void for want of ratification but
it cannot be said that this would render the entire amendment stillborn - The Statement of Objects and Reasons for the Constitution
97th Amendment Act makes it clear 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 -
Part IXB of the Constitution is operative insofar as it concerns multiState co-operative societies both within the various States and in
the Union territories of India - Held (per K.M. Joseph, J.)
(dissenting) - Doctrine of Severability must apply on surer
foundations - Provisions relating to Art.243ZI to Art.243ZQ and
Art.243ZT, are unconstitutional for non-compliance, with the
mandate of the proviso to Art.368(2) of the Constitution - However,
it cannot be said that the Doctrine of Severability will apply to
sustain Art.243ZR and Art.243ZS to the multistate cooperative
societies operating in the Union Territories, and that, it would not
apply to cooperative societies confined to the Union Territories -
Once the Court has painted the substantial provisions (Art.243ZI to
243ZQ), with the brush of unconstitutionality, rendering those
provisions, still born, the provisions contained in Art.243ZR and
Art.243ZS cease to be workable and are impossible to sustain -
Constitution (Ninety Seventh Amendment) Act, 2011 - Doctrine of
Severability - Applicability - Co-operative Societies.
Disposing of the appeals, the Court
HELD:
Per R. F. Nariman, J. [for himself and B. R. Gavai, J.)]
1.1. Our Consti

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SUPREME COURT REPORTS
[2021] 5 S.C.R.
 [2021] 5 S.C.R. 458
458
UNION OF INDIA
v.
RAJENDRA N. SHAH AND ANOTHER
(Civil Appeal Nos. 9108-9109 of 2014)
JULY 20, 2021
[R. F. NARIMAN, K. M. JOSEPH AND B. R. GAVAI, JJ.]
Constitution (Ninety Seventh Amendment) Act, 2011 -
Challenge to, on procedural grounds - Vires of the Constitution
97th Amendment Act, which inter alia introduced Part IXB (consisting
of Arts.243ZH to 243ZT) under the chapter heading 'The Cooperative Societies' - Whether the constitutional amendment
inserting Part IXB was ultra vires the Constitution for want of
requisite ratification under Art.368(2) proviso - Held: From the
restrictions contained in Part IXB, it is clear that the exclusive
legislative power contained in Entry 32 List II of the 7th Schedule
has been significantly and substantially impacted in that such
exclusive power is now subjected to a large number of curtailments
- By curtailing the width of Entry 32, List II of the 7th Schedule,
Part IXB seeks to effect a significant change in Art.246(3) read
with Entry 32 List II of the 7th Schedule inasmuch as the State's
exclusive power to make laws with regard to the subject of cooperative societies is significantly curtailed thereby directly
impacting the quasi-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
Art.368(2) of the Constitution - Ratification not having been
effected, the Amendment is non-est - The Constitution 97th Amendment
Act is void for want of ratification - Constitution of India - Part
IXB (Arts.243ZH to 243ZT); Art. 368(2) proviso and Schedule VII,
List II, Entry 32 - Co-operative Societies.
Constitution of India, 1950 - Part IXB (consisting of
Arts.243ZH to 243ZT) inserted by the Constitution 97th Amendment
Act and Art.368(2) proviso - Constitutional amendment inserting
Part IXB found to be ultra vires the Constitution for want of requisite
ratification under Art.368(2) proviso - Whether, even if Part IXB is
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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 - Held (per R.F.
Nariman, J. [for himself and B.R. Gavai, J.]) (per majority) - The
Constitution 97th Amendment Act is void for want of ratification but
it cannot be said that this would render the entire amendment stillborn - The Statement of Objects and Reasons for the Constitution
97th Amendment Act makes it clear 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 -
Part IXB of the Constitution is operative insofar as it concerns multiState co-operative societies both within the various States and in
the Union territories of India - Held (per K.M. Joseph, J.)
(dissenting) - Doctrine of Severability must apply on surer
foundations - Provisions relating to Art.243ZI to Art.243ZQ and
Art.243ZT, are unconstitutional for non-compliance, with the
mandate of the proviso to Art.368(2) of the Constitution - However,
it cannot be said that the Doctrine of Severability will apply to
sustain Art.243ZR and Art.243ZS to the multistate cooperative
societies operating in the Union Territories, and that, it would not
apply to cooperative societies confined to the Union Territories -
Once the Court has painted the substantial provisions (Art.243ZI to
243ZQ), with the brush of unconstitutionality, rendering those
provisions, still born, the provisions contained in Art.243ZR and
Art.243ZS cease to be workable and are impossible to sustain -
Constitution (Ninety Seventh Amendment) Act, 2011 - Doctrine of
Severability - Applicability - Co-operative Societies.
Disposing of the appeals, the Court
HELD:
Per R. F. Nariman, J. [for himself and B. R. Gavai, J.)]
1.1. Our Constitution has been described as quasi-federal
in that, so far as legislative powers are concerned, though there
is a tilt in favour of the Centre vis-à-vis the States given the federal
supremacy principle, yet within their own sphere, the States have
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exclusive power to legislate on topics reserved exclusively to
them. Article 246(3) read with List II of the 7th Schedule of the
Constitution of India reflects an important constitutional principle
that can be said to form part of the basic structure of the
Constitution, namely, the fact that the Constitution is not unitary
but quasi-federal in character. [Paras 57, 58][517-B-D]
1.2. Article 246 of the Constitution contains the power to
legislate, the topics of legislation contained in the three Lists
are described as 'fields of legislation'. The non-obstante clause
contained in Articles 246(1) and 246(2) and the 'subject to' clause
contained in Article 246(3) lay down the doctrine of federal
supremacy, i.e. 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. Such overlap is not to be
easily found - on the contrary, it is only in the case 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. [Paras 16, 17][491-G; 492-A-C]
2.1. So far as co-operative societies are concerned, it is
entirely a matter for the States to legislate upon, being the last
subject matter mentioned in Entry 32 List II. 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. 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. [Para 23][497-E-G]
2.2. There are two separate spheres relating to multi-State
co-operative societies and cooperative societies. 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 cooperative societies i.e., co-operative
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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
principle. There is exclusive power to make laws, so far as cooperative societies are concerned, with the State Legislatures,
which is contained in Article 246(3) read with Entry 32 of List II.
[Para 26][499-D-F]
3.1. The power of amendment of the Constitution is
contained in Article 368 of the Constitution of India. 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 laid down in the Article.
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). However, there is a
procedure when it comes to amending certain specified articles/
provisions in the proviso to Article 368(2). [Paras 27, 28 and
29][500-A; 501-A-D]
3.2. Sub-clause (b) of the proviso 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 deals with
the High Courts in the States, and Chapter I of Part XI which
deals with legislative relations between the Union and the States.
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. [Paras 30, 31][501D-G]
3.3. 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
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such amendment is presented to the President for assent. Unlike
the 73rd and 74th Constitution Amendments Acts, which inserted
Part IX dealing with Panchayats and Part 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. [Para 32][501-G-H; 502-A-B]
4.1. The ambit of Parliament's 'constituent power' is
referred to in Article 368(1). Though an amendment of the
Constitution is the exercise of constituent power which differs
from ordinary legislative power, such constituent power does not
convert 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 contained in the Constitution of India. The procedural
limitations are contained in Sub-Article 2 of Article 368. The
substantive limitation is that a constitutional amendment can only
pass muster if it does not damage the basic structure or essential
features of the Constitution. [Para 33][502-B-E]
4.2. A challenge to a constitutional amendment may,
therefore, be on procedural or substantive grounds. The present
case concerns itself with the procedural ground contained in
Article 368(2) proviso. For Article 368(2) proviso to apply, various
tests have been laid down by this Court in some of its judgments.
The tests laid down in Sankari Prasad Singh and Sajjan Singh are
referred to in Kihoto Hollohan's case. A reading of the 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 speak of a 'change-in 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 therein in some
significant way. [Paras 36, 37 and 56][504-F-G; 516-G-H; 517-A]
5. A reading of the Builders' Assn. of India case and the
Seervai's commentary would show that any significant addition
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or curtailment of a field of legislation which is contained in an
Entry in List II of the 7th Schedule of the Constitution would also
amount to a 'change' so as to attract the proviso to Article 368(2).
It is not necessary that a change referred to in the proviso to
Article 368(2) would only be if some part of a subject matter 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. [Para 60][520-D-F]
6. In matters affecting the Constitution of India, form always
gives way to substance. Had exceptions been provided in Entry
32 List II itself, such amendment to Entry 32 List II would require
ratification. Also, 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 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 Constitution 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 itself 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. [Para 61][520-G-H; 521-A-C]
7.1. Part IX B of the Constitution consists of Articles 243ZH
to 243ZT. From the restrictions contained in Part IXB, it is clear
that the exclusive legislative power that is contained in Entry 32
List II has been significantly and substantially impacted in that
such exclusive power is now subjected to a large number of
curtailments. Indeed, Article 243ZI specifically mandates that the
exclusive legislative power contained in Entry 32 List II of the
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State Legislature is now severely curtailed as it 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.
[Paras 64, 65][521-E-G; 523-C-D]
7.2. An analysis of Part IXB of the Constitution leads to the
result that though Article 246(3) and Entry 32, List II of the 7th
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 7th 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 quasi-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.
[Para 67][524-A-C]
8. Part IX of the Constitution of India was inserted into the
Constitution by the Constitution (73rd Amendment) Act, 1992 and
Part IXA inserted into the Constitution by the Constitution (74th
Amendment) Act, 1992 made similar provisions qua Panchayats
and Municipalities. Both the Constitution 73rd and 74th
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 Panchayats 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 which are
inconsistent with the provisions of Parts IX and IXA respectively
will automatically cease after the expiration of one year from the
commencement of the two Constitutional Amendments. In
addition to these provisions, Parts IX and IXA also contain Article
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243O and Article 243ZG ousting the jurisdiction of the courts
and thereby, in effect, curtailing 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 73rd
and 74th Amendments, the Constitution 97th Amendment Act also
required ratification. [Paras 68, 69][524-C-H; 525-A-C]
9.1. It was argued that the constituent power that is
exercised in enacting the 97th Amendment cannot be assimilated
with legislative power, and that once the Constitution stands
amended by insertion of Part IXB, Article 245 mandates that all
legislation 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 Constitution of India. 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, 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. [Paras
70, 71][525-D-F]
9.2. It was then argued that 17 out of 28 States had enacted
legislations incorporating provisions of Part IXB, and that,
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therefore, they had impliedly accepted the restrictions laid down
in the said Part. This argument need not detain this Court
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 matter any further. When a citizen of India challenges a
constitutional amendment as being procedurally infirm, it is the
duty of the court to examine such challenge on merits as the
Constitution of India is a national charter of governance affecting
persons, citizens and institutions alike. [Para 72][525-G-H; 526A-B]
10.1. It was then 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 societies,
the well-known legislative device of "reference" to existing
provisions was instead utilised by Article 243ZR and therefore
one should view the matter as if a separate part within Part IXB
has been enacted insofar as multi-State co-operative societies
are concerned. There is substance in this argument. The
Statement of Objects and Reasons for the Constitution 97th
Amendment Act makes it clear 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 cooperative societies are separately dealt with in a separate subchapter contained within Part IXB. Also, there is no doubt that
after severance what survives can and does stand independently
and is workable. [Paras 76, 77][531-G-H; 532-D-G]
10.2. It was suggested by the Respondents 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. This argument is rejected for two
reasons. If the doctrine of severability were not to apply for the
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afore-stated reason, then the majority judgment in Kihoto
Hollohancase 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 case. 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
this Court. This being the case, it is declared that Part IXB of the
Constitution of India is operative insofar as multi-State cooperative societies are concerned. [Para 77][532-G-H; 533-AC]
11.1. 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 Union territory
are concerned, the same infirmity as is found in the main part of
the judgment continues insofar as the legislative subject "cooperative 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. [Para 78][533-C-F]
11.2. 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. It is declared that Part IXB of the
Constitution of India is operative only insofar as it concerns multiState co-operative societies both within the various States and in
the Union territories of India. [Para 80][534-A-B]
Kihoto Hollohan v. Zachillhu 1992 Supp (2) SCC 651 :
[1992] 1 SCR 686 - followed.
Sankari Prasad Singh Deo v. Union of India [1952]
SCR 89; Sajjan Singh v. State of Rajasthan [1965] 1
SCR 933; Hoechst Pharmaceuticals Ltd. v. State of
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
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Bihar, (1983) 3 SCR 130; Kerala SEB v. Indian
Aluminium Co. Ltd., (1976) 1 SCC 466 : [1976] 1
SCR 552; Goodricke Group Ltd. v. State of W.B., 1995
Supp (1) SCC 707: [1994] 6 Suppl. SCR 120; Govt.
of A.P. v. J.B. Educational Society, (2005) 3 SCC 212 :
[2005] 2 SCR 302; Greater Bombay Coop. Bank Ltd.
v. United Yarn Tex (P) Ltd. (2007) 6 SCC 236 : [2007]
4 SCR 823; State of W.B. v. Committee for Protection
of Democratic Rights, (2010) 3 SCC 571 : [2010] 2
SCR 97; Daman Singh v. State of Punjab, (1985) 2 SCC
670 : [1985] 3 SCR 580; Apex Cooperative Bank of
Urban Bank of Maharashtra & Goa Ltd. v.
Maharashtra State Cooperative Bank Ltd., (2003) 11
SCC 66; Thalappalam Service Coop. Bank Ltd. v. State
of Kerala (2013) 16 SCC 82 : [2013] 14 SCR 475; K.
Damodarasamy Naidu & Bros. v. State of T.N., (2000)
1 SCC 521 : [1999] 3 Suppl. SCR 597; Kesavananda
Bharati v. State of Kerala, (1973) 4 SCC 225 : [1973]
Suppl. SCR 1; M. Nagaraj v. Union of India, (2006) 8
SCC 212 : [2006] 7 Suppl. SCR 336; I.R. Coelho v.
State of T.N., (2007) 2 SCC 1 : [2007] 1 SCR 706; Dr.
Jaishri Laxmanrao Patil v. Chief Minister and Ors.,
2021 SCC OnLine SC 362; Bhim Singh v. Union of
India, (2010) 5 SCC 538: [2010] 6 SCR 218; B.P.
Singhal v. Union of India, (2010) 6 SCC 331; Builders'
Assn. of India v. Union of India (1989) 2 SCC 645 and
Vipulbhai M. Chaudhary v. Gujarat Coop. Milk Mktg.
Federation Ltd. (2015) 8 SCC 1: [2015] 3 SCR 997 -
relied on.
Golak Nath v. State of Punjab [1967] 2 SCR 762;
Cellular Operators Assn. of India v. TRAI, (2016) 7 SCC
703 : [2016] 9 SCR 1 and D.C. Wadhwa v. State of
Bihar, (1987) 1 SCC 378 : [1987] 1 SCR 798 -
referred to.
'Constitutional Law of India' (4th Edition) by H.M.
Seervai, p.3156 - referred to.
per K.M. Joseph, J. (partly dissenting)
1. The provisions relating to Article 240ZI to Article 243ZQ
and Article 243ZT, are unconstitutional for non-compliance, with
the mandate of the proviso to Article 368(2) of the Constitution
of India. However, it cannot be said that the Doctrine of
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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. [Para 2][534C-E]
2. The Doctrine of Severability came up for consideration
in R.M.D. Chamarbaugwalla case. Therein, this Court has laid
down certain Rules in this regard. [Para 10][542-E]
3.1. The first Rule laid down in R.M.D. Chamarbaugwalla
case 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, whether the Legislature would have enacted the
valid Part, if it had known that the rest of the Statute was invalid.
Also, in determining the legislative intent, it will be legitimate to
take into account, the history of the legislation and its objects,
inter-alia. [Para 16][552-C-D]
3.2. From the Statement of Objects and Reasons for the
Ninety-Seventh Amendment, it is discernible that there were
weaknesses found in safeguarding the interests of the members
of the cooperative societies. Elections were being postponed
indefinitely. There was inadequate professionalism in
management. It was found that cooperatives needed to be run on
well-established democratic principles and elections had to be
held on time and in a free and fair manner. It was further noted
that "cooperative societies" is a subject enumerated in Entry 32
of the State List of the Seventh Schedule. That laws were made
by the State Legislatures, were noticed. Reforms, were in short,
found necessary in the Cooperative Society Acts of the States.
Consultation with the State Governments were held several
times. The Central Government was committed, it is stated to
ensure that the cooperative societies, in the country, were to
function in a democratic, professional, autonomous and
economically sound manner. It is in this connection that Part IXB
was inserted to empower Parliament in respect of multistate
cooperative societies, and State Legislatures, in case of other
cooperative societies, to make appropriate law. [Para 18][554-FH; 555-A-C]
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
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3.3. The intention discernible was that Parliament 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
Legislatures, falling under Entry 32 of List II of Seventh Schedule,
or the appropriate Entry under List I. 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,
which actually conditioned the legislative power, among other
things, was directed against the State Legislatures.
[Paras 19, 20][555-C-E]
4. The second Rule laid down in R.M.D. Chamarbaugwalla
case is to enquire whether the valid and invalid provisions 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. [Para 21][555-E-G]
5. The third Rule provides that even if they (the provisions)
are distinct and separate, 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 failure of a whole. In Kihoto
Hollohan case, this Court, after bearing in mind the Rules,
apparently laid down in R.M.D. Chamarbaugwalla case, has
proceeded to clearly articulate the test, inter-alia, viz., as to
whether, after severance, what survives, can stand independently
and is workable. [Para 22][555-G-H; 556-A]
6. It is plain from the Statement of Objects and Reasons,
that Parliament was fully aware that Entry 32 clothed the
Legislatures of the State with exclusive legislative power to make
laws in regard to cooperative societies, which were not multistate
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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 provisions. The Ninety-Seventh
Amendment was passed in 2012, several years after the decision
in Kihoto Hollohan case. It is clear that the law was laid down by
the Constitution Bench of this Court in Kihoto Hollohan case,
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
form. 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 Cooperative 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 place to
govern cooperative societies. Uniformity and, in fact, identical
treatment for all cooperative societies whether they are created
under State Law or by Parliament, was the goal. [Para 23]
[556-B-F]
7. 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
Constitution, this presumption of constitutionality, and also the
duty of the Court, becomes even more pronounced. If, indeed,
on the Doctrine of Severability, the provisions contained in Article
243QR and Article 243QS, can be sustained, the law must survive
rather than perish. The question, however, is on the terms of the
provisions in question (Articles 243QR and 243QS), and bearing
in mind the principles, can they survive on their own, after the
invalidation of Article 243ZH to Article 243ZQ and Article 243ZT.
Are the provisions of Article 243ZR and 243ZS independent
provisions and workable? 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
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
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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. 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. Are these provisions
independent and workable? One 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. More importantly, once the Court has painted the
relevant 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. Unless the provisions, which have been
found unconstitutional, are kept alive, Articles 243ZR and 243ZQ
are plainly unworkable. [Paras 25, 27, 28, 29, 30][556-G-H; 557A-C, G-H; 558-A-E]
Kihoto Hollohan v. Zachillhu and others (1992) Suppl.
2 SCC 651 : [1992] 1 SCR 686 - followed.
R.M.D. Chamarbaugwalla and another v. Union of
India and another AIR 1957 SC 628: [1957] SCR 930
- relied on.
Case Law Reference
In the Judgment of R.F. NARIMAN, J. (for himself and
B.R. GAVAI, J.)
[1952] SCR 89
relied on
Para 8
[1965] 1 SCR 933
relied on
Para 8
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473
[1992] 1 SCR 686
followed
Para 8
[1967] 2 SCR 762
referred to
Para 8
[2015] 3 SCR 997
relied on
Para 10
(1989) 2 SCC 645
relied on
Para 11
[1999] 3 Suppl. SCR 597
relied on
Para 11
[2016] 9 SCR 1
referred to
Para 11
[1987] 1 SCR 798
referred to
Para 13
[1983] 3 SCR 130
relied on
Para 16
[1976] 1 SCR 552
relied on
Para 17
[1994] 6 Suppl. SCR 120
relied on
Para 19
[2005] 2 SCR 302
relied on
Para 20
[2007] 4 SCR 823
relied on
Para 21
[2010] 2 SCR 97
relied on
Para 22
[1985] 3 SCR 580
relied on
Para 23
(2003) 11 SCC 66
relied on
Para 23
[2013] 14 SCR 475
relied on
Para 25
[1973] Suppl. SCR 1
relied on
Para 33
[2006] 7 Suppl. SCR 336
relied on
Para 34
[2007] 1 SCR 706
relied on
Para 34
[2010] 6 SCR 218
relied on
Para 57
(2010) 6 SCC 331
relied on
Para 57
In the Judgment of K.M. JOSEPH, J.
[1957] SCR 930
relied on
Para 10
[1992] 1 SCR 686
followed
Para 14
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 91089109 of 2014.
From the Judgment and Order dated 22.04.2013 of the High Court
of Gujarat at Ahmedabad in W.P. (PIL) No.166 of 2012 and 29.04.2013
in Misc. Civil Application No.890 of 2013.
With
Civil Appeal Nos. 281 And 282 Of 2020, Civil Appeal Nos. 2825,
2826 And 2827 of 2021.
K.K. Venugopal, AG, Tushar Mehta, SG, P.K. Jani, Ms. Manisha
Lavkumar, Sr. Advs., Kanu Agrawal, Zoheb Hussain, Ms. Meenakshi
Grover, S.K. Gupta, Ms. Shraddha Deshmukh, Chinmayee Chandra,
Amrish Kumar, Raj Bahadur Yadav, Mohit Paul, Ms. Shikha Sarin, Ms.
Sunaina Phul, Sahil M. Shah, Shivang Jani, Masoom K. Shah, Vishwas
K. Shah, Mrs. Neha Shah, Dhrupad Patel, Anup Jain, Udit Gupta,
Abhishek Baid, Pulkit Tare, Ms. Ritika Sinha, V. K. Monga, K. Maruthi
Rao, Mrs. K. Radha, Mrs. Anjani Aiyagari, Ms. Hemantika Wahi,
Aniruddha P. Mayee, Advs. for the appearing parties.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. Applications for intervention are allowed. Leave granted.
2. These appeals raise an important question as to the vires of the
Constitution (Ninety Seventh Amendment) Act, 2011 [the "Constitution
97th Amendment Act"] which inter alia introduced Part IXB under
the chapter heading 'The Co-operative Societies'. The Constitution 97th
Amendment Act was passed by the requisite majority of the Lok Sabha
on 27.12.2011 and the Rajya Sabha on 28.12.2011. The Presidential assent
to the aforesaid Amendment followed on 12.01.2012 and the said
Amendment was published in the Official Gazette of India on 13.01.2012,
coming into force with effect from 15.02.2012. The important question
raised in these petitions and decided by a division bench of the Gujarat
High Court by the impugned judgment dated 22.04.2013 is whether Part
IXB is non est for want of ratification by half of the States under the
proviso to Article 368(2). The impugned judgment of the High Court has
declared that the said constitutional amendment inserting Part IXB is
ultra vires the Constitution of India for want of the requisite ratification
under Article 368(2) proviso, which however will not impact amendments
that have been made in Article 19(1)(c) and in inserting Article 43B in
the Constitution of India.
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3. The co-operatives movement in India can be legislatively traced
to two British Acts, namely, the Cooperative Societies Act, 1904 and the
Co-operative Societies Act, 1912. Under the Government of India Act,
1919, the subject 'co-operative societies' was contained in entry 13 of
the Provincial list. This was continued by the Government of India Act,
1935, 'co-operative societies' being contained in entry 33 of the Provincial
list. This was then further continued by the Constitution of India, this
time the same entry falling within Schedule VII List II, i.e., the State
List as a part of entry 32 thereof. It is therefore important at this stage to
set out the constitutional scheme insofar as it applies to co-operative
societies thus:
Art 19. Protection of certain rights regarding freedom of
speech, etc.-
(1) All citizens shall have the rightxxx xxx xxx
(c) to form associations or unions or co-operative societies;
xxx xxx xxx
Art 43B. Promotion of co-operative societies.-
The State shall endeavour to promote voluntary formation,
autonomous functioning, democratic control and professional
management of co-operative societies.
SEVENTH SCHEDULE
(Article 246)
List I-Union List
xxx xxx xxx
43. Incorporation, regulation and winding up of trading corporations,
including banking, insurance and
financial corporations, but not including co-operative societies.
44. Incorporation, regulation and winding up of corporations,
whether trading or not, with objects not confined to one State, but
not including universities.
xxx xxx xxx
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER
[R. F. NARIMAN, J.]
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List II-State List
xxx xxx xxx
32.