97th Constitutional Amendment- Management of Cooperatives| BY Rahul Saxena @LexCliq

The 97th constitutional amendment, which dealt with issues related to effective management of cooperative
societies in the country, was passed by parliament in 2011. This amendment made right to freedom to form cooperative societies a fundamental right under article 19(1)(c) It added article 43B under Part IV of the constitution (DPSP)
“The State Shall endeavour to promote Voluntary formation, autonomous functioning, democratic Control and
professional management of the Co-operative societies” It also inserted Part IX B of the constitution which deals with incorporation, terms of members of the board and its office bearers and effective management of cooperative societies.

Constitution (Ninety Seventh Amendment) Act 2011 relating to the Co-operatives was enacted to encourage economic activities of Cooperatives which in turn help progress of rural India. It is expected to not only ensure autonomous and democratic functioning of Cooperatives, but also the accountability of the management to the members and other Stakeholders.

The Major features of the Act are as follows:

1. Incorporation, regulation and winding up of cooperative Societies based on the principles of Voluntary formation, democratic member Control, member economic participation and autonomous functioning;
2. Specifying the maximum number of directors of a Co-operatives Society to be not exceeding twenty-one members;
3. A fixed term of five years from the date of election in respect of the elected members of the board and its office bearers; and an authority or body for the Conduct of elections to a Cooperative Society;
4. A maximum time limit of Six months during which board of directors of a Co-operative Society Could be kept under Supersession or suspension;
5. Independent professional audit;
6. right of information to the members of the Co-operative Societies;
7. Empowering the State Governments to obtain periodic reports of activities and accounts of Co-operatives Societies;
8. reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two Seats for women on the board of every Cooperative Society, which have individuals as members from Such Categories ; and
9. Penalties in respect of offences relating to Co-Operatives Societies.

Rajendra N Shah vs Union of India Case:•

The part IX B needlessly created a rigid structure and actually runs counter to spirit of fundamental rights in the
Articles 19(1) (c) The Gujarat High Court, in April 2013 (Rajendra N Shah vs Union of India) quashed Chapter IX
B on the ground that it amounts to amendment of States’ legislative powers (cooperatives are listed in item 32
of List II of the Seventh Schedule) An appeal was made by the central government to the supreme court and stated that the
amendment was made to bring uniformity in the management of cooperative societies and it did not take away
the powers of states

SC verdict:

The Supreme Court on Tuesday in a 2:1 majority verdict upheld the validity of the 97th constitutional amendment but
struck down a part of the amendment which shrank the exclusive authority of States over its cooperative societies.
The court held that
Part IX B, which consists of Articles 243ZH to 243ZT, has “significantly and substantially impacted” State
legislatures’ “exclusive legislative power” over its cooperative sector under Entry 32 of the State List.
The 97th Amendment which inserts the chapter dealing with cooperative societies has not been so ratified by
the States
(If Parliament intends to amend or delete any of the lists in the seventh schedule, such an Amendment shall
require to be ratified by the legislature of not less than half of the states)

The judgment assumes significance in the background of fears voiced by the States whether the new Central Ministry of
Cooperation would dis-empower them.

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