Supreme Court of India
UNION OF INDIAversusRAJENDRA N. SHAH AND ANOTHER
- Citation
- 2021 INSC 340
- Decided
- 20 July 2021
- Disposal
- Disposed off
- Bench
- R F NARIMAN
Holding
The Constitution (97th Amendment) Act, 2011 is void for lack of required ratification, but Part IXB remains operative only insofar as it governs multi‑State cooperative societies and Union territories.
Summary
The Union of India challenged the Constitution (Ninety‑Seventh Amendment) Act, 2011 which inserted Part IXB (Arts.243ZH‑243ZT) on cooperative societies, arguing that it curtails the exclusive legislative power of States under Entry 32, List II and therefore required ratification by at least half of the States under Article 368(2) proviso. The Court examined the quasi‑federal structure, the impact of Part IXB on Article 246(3) and the procedural requirements of Article 368, concluding that the amendment significantly altered the scope of Entry 32 and was not ratified, rendering Articles 243ZH‑243ZQ and 243ZT void. However, the Court applied the doctrine of severability, holding that the provisions relating to multi‑State cooperative societies (Arts.243ZR‑243ZS) could survive because they operate independently of the invalidated parts. Consequently, Part IXB remains operative only for multi‑State cooperative societies and Union territories, while the rest of the amendment is struck down. The appeals were dismissed, leaving the High Court judgment modified accordingly.
Issues considered
- The Constitution (97th Amendment) Act, 2011 inserted Part IXB affecting cooperative societies; does this amendment require ratification by at least half of the States under Article 368(2) proviso?
- Does Part IXB infringe the exclusive legislative competence of States under Entry 32, List II, thereby violating the quasi‑federal principle and basic structure?
- Can the doctrine of severability preserve the provisions relating to multi‑State cooperative societies (Arts.243ZR‑243ZS) while striking down the rest of Part IXB?
- Whether the amendment’s impact on Article 246(3) and the legislative lists constitutes a ‘change‑in‑effect’ attracting the proviso to Article 368(2).
Legislation cited
- Constitution (Fifty‑second Amendment) Act, 1985s. Tenth Schedule – Paragraph 7
- Constitution (Forty‑sixth Amendment) Act, 1982s. Article 366(29A)
- Constitution (Ninety-Seventh Amendment) Act, 2011s. Part IXB (Arts.243ZH‑243ZT)
- Constitution (One Hundred and Second Amendment) Act, 2018s. Article 342A, s. Article 366(26C)
Subjects
Constitutional amendmentArticle 368(2) provisoRatification by StatesCo‑operative societiesFederalismQuasi‑federal structureDoctrine of severabilityPart IXBLegislative competenceState List Entry 32
Judgment
458 [2021]
SUPREME COURT 5 S.C.R. 458
REPORTS [2021] 5 S.C.R.
A UNION OF INDIA
v.
RAJENDRA N. SHAH AND ANOTHER
(Civil Appeal Nos. 9108-9109 of 2014)
B 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
C
of Arts.243ZH to 243ZT) under the chapter heading ‘The Co-
operative 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
D 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 7 th Schedule inasmuch as the State’s
E
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
F 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.
G
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
H
458
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 459
constitutionally infirm qua co-operative societies operating within A
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 still-
B
born – 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 C
matters so far as “other cooperative societies” are concerned –
Part IXB of the Constitution is operative insofar as it concerns multi-
State 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
D
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 E
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 –
F
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.)] G
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
H
460 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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]
B
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
C 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
D 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,
E 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
F 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
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 461
societies having objects not confined to one state alone, is A
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 co-
operative societies are concerned, with the State Legislatures,
B
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 C
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, D
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 E
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 F
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][501-
D-G] 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 H
462 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
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
C 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
D 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
E 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)
F 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
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 463
or curtailment of a field of legislation which is contained in an A
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
B
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] C
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 D
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, E
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 F
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 G
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
H
464 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 97 th Amendment Act.
B
[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
C 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
D 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]
E
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 73 rd and 74 th
F 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
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 465
243O and Article 243ZG ousting the jurisdiction of the courts A
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
B
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 C
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
D
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 7 th E
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. F
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 G
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,
H
466 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
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
C persons, citizens and institutions alike. [Para 72][525-G-H; 526-
A-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,
D 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 97 th
E 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
F 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. 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]
G
10.2. It was suggested by the Respondents that the
consequence of this Court holding that the Constitution 97 th
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
H reasons. If the doctrine of severability were not to apply for the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 467
afore-stated reason, then the majority judgment in Kihoto A
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
B
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 co- C
operative societies are concerned. [Para 77][532-G-H; 533-A-
C]
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 D
also to legislate insofar as the Union territories are concerned.
However, given the truncation of Entry 32 List II of the 7 th
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 E
the judgment continues insofar as the legislative subject “co-
operative 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] 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 multi-
State co-operative societies both within the various States and in
the Union territories of India. [Para 80][534-A-B] G
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 H
468 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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.
B 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.
C 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]
D 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.
E
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.
F 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’ (4 th Edition) by H.M.
G 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
H of India. However, it cannot be said that the Doctrine of
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 469
Severability will apply to sustain Article 243ZR and Article 243ZS A
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][534-
C-E]
2. The Doctrine of Severability came up for consideration B
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 C
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]
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 E
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, F
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 G
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-F-
H; 555-A-C]
H
470 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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,
B
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
C 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
D 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
E 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
F 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
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 471
cooperative societies. Parliament was fully aware that laws had A
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
B
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 C
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
D
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] E
[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, F
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. G
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 H
472 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B 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
C 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
D 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
E 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; 557-
A-C, G-H; 558-A-E]
F 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.
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 473
[1992] 1 SCR 686 followed Para 8 A
[1967] 2 SCR 762 referred to Para 8
[2015] 3 SCR 997 relied on Para 10
(1989) 2 SCC 645 relied on Para 11
B
[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
C
[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 D
[2007] 4 SCR 823 relied on Para 21
[2010] 2 SCR 97 relied on Para 22
[1985] 3 SCR 580 relied on Para 23
E
(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 F
[2007] 1 SCR 706 relied on Para 34
[2010] 6 SCR 218 relied on Para 57
(2010) 6 SCC 331 relied on Para 57 G
In the Judgment of K.M. JOSEPH, J.
[1957] SCR 930 relied on Para 10
[1992] 1 SCR 686 followed Para 14
H
474 SUPREME COURT REPORTS [2021] 5 S.C.R.
A CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9108-
9109 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.
B 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
C 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,
D 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.
E 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 97 th
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
F 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
G 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
H the Constitution of India.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 475
[R. F. NARIMAN, J.]
3. The co-operatives movement in India can be legislatively traced A
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
B
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 C
speech, etc.—
(1) All citizens shall have the right—
xxx xxx xxx
(c) to form associations or unions or co-operative societies; D
xxx xxx xxx
Art 43B. Promotion of co-operative societies.—
The State shall endeavour to promote voluntary formation,
autonomous functioning, democratic control and professional E
management of co-operative societies.
SEVENTH SCHEDULE
(Article 246)
List I—Union List F
xxx xxx xxx
43. Incorporation, regulation and winding up of trading corporations,
including banking, insurance and
financial corporations, but not including co-operative societies.
G
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
H
476 SUPREME COURT REPORTS [2021] 5 S.C.R.
A List II—State List
xxx xxx xxx
32. Incorporation, regulation and winding up of corporations, other
than those specified in List I, and universities; unincorporated
trading, literary, scientific, religious and other societies and
B associations; cooperative societies.
xxx xxx xxx
4. On 07.12.2004, a conference of ministers dealing with co-
operatives in the various states resolved to amend the Constitution to
C 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:
D “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
E committee.
It was, therefore, resolved a high power committee would be
constituted by the Central Government consisting of
representatives of the State governments, concerned Ministries
of the central government, eminent cooperators and other public
F 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.”
G 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 Objects and
Reasons for the aforesaid Constitution Amendment is important and is
set out hereunder:
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 477
[R. F. NARIMAN, J.]
“STATEMENT OF OBJECTS AND REASONS A
The co-operative sector, over the years, has made significant
contribution to various sectors of national economy and has
achieved voluminous growth. However, it has shown weaknesses
in safeguarding the interests of the members and fulfillment of
objects for which these institutions were organised. There have B
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 members.
Inadequate professionalism in management in many of the co-
operative institutions has led to poor services and low productivity. C
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 D
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 E
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, been
experienced that in spite of considerable expansion of co-
operatives, their performance in qualitative terms has not been up F
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- G
operatives free from unnecessary outside interferences and also
to ensure, their autonomous organisational set up and their
democratic functioning.
3. The Central Government is committed to ensure that the co-
operative societies in the country function in a democratic, H
478 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
societies like democratic, autonomous and professional functioning.
A new article is also proposed to be inserted in Part IV of the
B
Constitution (Directive Principles of State Policy) for the States
to endeavor to promote voluntary formation, autonomous
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-
C 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 democratic
D 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
E 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;
F
(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
G 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;
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 479
[R. F. NARIMAN, J.]
(i) providing for offences relating to co-operative societies and A
penalties in respect of such offences.
4. It is expected that these provisions will not only ensure 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 B
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: C
PART IXB
THE CO-OPERATIVE SOCIETIES
243ZH. Definitions. —
In this Part, unless the context otherwise requires,— D
(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 E
is entrusted to;
(c) “co-operative society” means a society registered or deemed
to be registered under any law relating to co-operative societies
for the time being in force in any State;
F
(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-President,
G
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-operative
H
480 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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;
B (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. —
C 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.
D 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
E 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
F 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 election and
the term of office bearers shall be coterminous with the term of
the board:
G 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
H co-option of persons to be members of the board having experience
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 481
[R. F. NARIMAN, J.]
in the field of banking, management, finance or specialisation in A
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): B
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 C
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. —
D
(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 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. F
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: G
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 H
482 SUPREME COURT REPORTS [2021] 5 S.C.R.
A (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
B 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
C 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 Banking Regulation
Act, 1949 shall also apply:
Provided also that in case of a co-operative society, other than a
D
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
E 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. —
F (1) The Legislature of a State may, by law, make provisions with
respect to the maintenance of accounts by the co-operative
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
G 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:
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 483
[R. F. NARIMAN, J.]
Provided that such auditors or auditing firms shall be appointed A
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. B
(5) The audit report of the accounts of an apex co-operative
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. — C
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.
D
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.
E
(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.
F
(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 G
the State Government including the following matters, namely: —
(a) annual report of its activities;
(b) its audited statement of accounts;
H
484 SUPREME COURT REPORTS [2021] 5 S.C.R.
A (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 body
B 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. —
C (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
D offences, namely:—
(a) a co-operative society or an officer or member thereof
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
E of the State Act;
(b) any person wilfully or without any reasonable excuse
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
F 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
G 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 members
of the board or office bearers, adopts any corrupt practice.
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 485
[R. F. NARIMAN, J.]
243ZR. Application to multi-State co-operative societies.— A
The provisions of this Part shall apply to the multi-State co-
operative societies subject to the modification that any reference
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. B
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 C
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 D
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
E
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.] F
7. As stated hereinabove, in the public interest, a Writ Petition
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. G
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 H
486 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 operate within a
particular state. He argued that even though there was no challenge
insofar as multi-State co-operative societies were concerned, the entirety
B
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, already
enacted legislative measures in conformity with Part IXB and that
C therefore more than half of the States had, in effect, accepted and applied
the provisions of Part IXB. What is also of significance is that the
Constitution 97th Amendment was preceded by a detailed consultation
with the State Governments as a result of which no State Government
has come forward to challenge the same. The learned Attorney General,
on a reading of several judgments of this Court dealing with ratification
D
of constitutional amendments, argued that there is no change either
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 legislative
E power has been given to the Union. All subject matters relating 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
F
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 other
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
G 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 Division Bench
that the Constitutional Amendment violated the basic structure of the
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 487
[R. F. NARIMAN, J.]
Constitution, in that it tinkered with the federal structure of the Constitution, A
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
B
fact strengthens the basic structure of the Constitution in streamlining
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 C
covered by Part IXB, as would Union territories, and that on applying
the aforesaid doctrine, Part IXB ought to be upheld, at least insofar as
the multi-State co-operative societies are concerned. He has cited a
number of judgments to buttress his submissions which will be reflected
in this judgment. D
10. Shri Prakash Jani, learned senior advocate appearing on behalf
of the Mehsana District Co-operative Milk Producers Union 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 E
its ‘constituent’ power and not ‘legislative’ power. Read with Article
245 of the Constitution of India, it would then be clear that since 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 7th Schedule is now being made
subject to Part IXB which is a part of the Constitution of India. He F
argued that Parliament in its constituent capacity can deal with State
subjects, and relied upon the insertion of Article 21A by Constitution
(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. G
Chaudhary v. Gujarat Coop. Milk Mktg. Federation Ltd., (2015) 8
SCC 1 to demonstrate that this judgment, though not dealing with the
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.
H
488 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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. According 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
B
contained in Entry 32 List 2, 7th Schedule. According to the learned
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
C 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
D
clear that there is a direct assault on Entry 32, List II of the 7 th 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
E 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 the Union
and the States. He also placed strong reliance on Builders’ Assn. of
F
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 legislative field which
pertains exclusively to the States and which impacts federalism would
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 489
[R. F. NARIMAN, J.]
thereafter amend their laws in furtherance of the Constitutional A
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 multi-
B
State co-operative societies are concerned. First and foremost, 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 C
multi-State co-operative societies, not being severable, the entirety of
Part IXB has correctly been held to be unconstitutional by the impugned
judgment. He also argued that if this Constitutional Amendment is
allowed to pass constitutional muster without ratification, there would be
no end to further amendments which would then indirectly rob the States
D
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 E
Societies, the width of the Entry is curtailed by Part 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 F
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 G
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
H
490 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
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
C 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
D important to advert to the constitutional scheme of legislative relations
between the Union of India and the States. This is laid down in Part
IXB, Chapter I in Articles 245 and 246 as follows: -
PART XI
RELATIONS BETWEEN THE UNION AND THE STATES
E
CHAPTER I.—LEGISLATIVE RELATIONS
Distribution of Legislative Powers
245. Extent of laws made by Parliament and by the
Legislatures of States. —
F
(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
G 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), Parliament
H has exclusive power to make laws with respect to any of the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 491
[R. F. NARIMAN, J.]
matters enumerated in List I in the Seventh Schedule (in this A
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 enumerated in
List III in the Seventh Schedule (in this Constitution referred to as B
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 in the
Seventh Schedule (in this Constitution referred to as the “State C
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 State]
notwithstanding that such matter is a matter enumerated in the
State List. D
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 E
the Constitution of India. List I contains subjects or topics 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, F
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 declared
that whereas Article 246 contains the power to legislate, the topics of G
legislation contained in the three Lists are described 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 H
492 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 Articles
246(1) and 246(2) and the ‘subject to’ clause contained in Article 246(3),
this Court, following Federal Court and Privy Council judgments, has
B 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. 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
C 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 power of
Parliament to legislate in regard to matters in List III, which are
D dealt with by clause (2), is supreme the Parliament has exclusive
power to legislate with respect to matters in List 1. The 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 of
E 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
F 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, though house
accommodation and rent control might fall within either the State
G list or the concurrent list, Entry 3 in List I of Seventh Schedule
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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 493
[R. F. NARIMAN, J.]
entry in List I will prevail. But before that happens attempt should A
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 other but
some portion of the subject-matter of that legislation incidentally
B
trenches upon and might come to fall under another list, the Act
as a whole would be valid notwithstanding such incidental
trenching. These principles have been laid down in a number of
decisions.”
18. In Hoechst Pharmaceuticals Ltd. (supra), this Court held: - C
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 federal supremacy
viz. that in case of inevitable conflict between Union and State
powers, the Union power as enumerated in List I shall prevail D
over the State power as enumerated in Lists II and III, and in
case of overlapping between Lists II and III, the former shall
prevail. But the principle of federal supremacy laid down in Article
246 of the Constitution cannot be resorted to unless there is an
“irreconcilable” conflict between the entries in the Union and State
Lists. In the case of a seeming conflict between the entries in the E
two Lists, the entries should be read together without giving a
narrow and restricted sense to either of them. Secondly, an attempt
should be made to see whether the two entries cannot be
reconciled so as to avoid a conflict of jurisdiction. It should be
considered whether a fair reconciliation can be achieved by giving F
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 G
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 upon
another list is only incidental.
(at page 165) H
494 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 Seventh
Schedule is set out in the decision of this Court in M.P.V.
B Sundararamier & Co. v. State of A.P. [1958 SCR 1422] and
needs no reiteration. Similarly, the proposition that the several
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
C situation, the rule of pith and substance has to be applied to
determine to which entry does a given piece of legislation relate.
Once it is so determined, any incidental trenching on the field
reserved to the other legislature is of no consequence. Of course,
the extent of encroachment may be an element in determining
D 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
E 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,
F 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 assigned to
Centre, the courts should be slow to adopt any interpretation which
tends to deprive the States of the few powers assigned to them
G 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
H of the matters enumerated in List I, notwithstanding anything
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 495
[R. F. NARIMAN, J.]
contained in clauses (2) and (3) of Article 246. The non obstante A
clause under Article 246(1) indicates the predominance or
supremacy of the law made by the Union Legislature in the event
of an overlap of the law made by Parliament with respect to a
matter enumerated in List I and a law made by the State
Legislature with respect to a matter enumerated in List II of the
B
Seventh Schedule.
10. There is no doubt that both Parliament and the State Legislature
are supreme in their respective assigned fields. It is the duty of
the court to interpret the legislations made by Parliament and the
State Legislature in such a manner as to avoid any conflict.
However, if the conflict is unavoidable, and the two enactments C
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 D
(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 the E
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 laws
with respect to any of the matters enumerated in List III in the F
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 in the
Seventh Schedule described as the “State List” but subject to
clauses (1) and (2). The three lists while enumerating in detail the G
legislative subjects carefully distribute the areas of legislative
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 to” in
Articles 246(2) and (3). Therefore, under Article 246(1) if any of H
496 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 legislate 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
B
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 ample as
Parliament’s.
C (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
D 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 State
Legislature has exclusive power to make laws for such State or
any part thereof with respect to any of the matters enumerated in
E 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 Legislature
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
F of Parliament to legislate with respect to matters enumerated 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 exercise of
power of the State Legislature.
G
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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 497
[R. F. NARIMAN, J.]
federal supremacy viz. that in case of inevitable conflict between A
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 B
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 C
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 D
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 State
subject, without the consent of the State Government concerned?
E
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 F
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 G
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 H
498 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
indication that the Constitution makers were of the view 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
C comprehended within the meaning of expression “corporations”.
24. Likewise, in Apex Cooperative Bank of Urban Bank of
Maharashtra & Goa Ltd. v. Maharashtra State Cooperative Bank
Ltd., (2003) 11 SCC 66, this Court delineated the two separate spheres
relating to multi-State co-operative societies and co-operative societies
D 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
E 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
F to cooperative societies are in the State List. Thus many States
have enacted laws relating to cooperative societies. We have not
seen other Acts. However, as this case concerns a society in
Maharashtra, the Maharashtra Cooperative Societies Act was
shown to us. Significantly, this law does not define a cooperative
G 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 cover all
cooperative societies and thus needs to indicate to which society
it applies.
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 499
[R. F. NARIMAN, J.]
25. Likewise, in Thalappalam Service Coop. Bank Ltd. v. State A
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 B
in the State to achieve the objects of equity, social justice 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 C
society is essentially an association or an association of persons
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 D
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 E
and hence, no need to apply the federal supremacy principle 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 are
concerned, with the State Legislatures, which is contained in 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: F
“21. Parliament, when exercising the powers to amend the
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 listed in G
List II in the Seventh Schedule is exclusively that of the State
Legislatures. …..”
(emphasis supplied)
H
500 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
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 addition,
C 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
D 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 who shall give 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—
E
(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 Chapter I of
Part XI, or
F (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
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 501
[R. F. NARIMAN, J.]
28. It may be seen that Article 368(1) refers to Parliament, which A
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.
29. So far as amendments that are made to any of the provisions B
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 C
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 D
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 deals with the E
High Courts in the States, and Chapter I of Part XI which deals 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.
F
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 of the States in
Parliament and a change to be made in the provisions of Article 368
itself respectively, with which we are not directly concerned. G
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 H
502 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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. The
question which arises in this appeal is whether the addition of this chapter
B
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
C 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-
D 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.
E 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 the
competence of the law-making authority. The competence of the
law-making authority would depend on the ambit of the legislative
F 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 field of the
G exercise of the amending power. Procedural limitations on the
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
H Supp (2) SCC 651].)
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 503
[R. F. NARIMAN, J.]
35. In I.R. Coelho v. State of T.N., (2007) 2 SCC 1, this Court A
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 B
of amending power, that it made the controlled Constitution
uncontrolled, that it removed all limitations on the power to amend
and that it sought to eliminate the golden triangle of Article 21
read with Articles 14 and 19. (See also Minerva Mills case [(1980)
3 SCC 625].)
C
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, that
fundamental rights are interconnected and some of them form
part of the basic structure as reflected in Article 15, Article 21
read with Article 14, Article 14 read with Articles 16(4), (4-A), D
(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. E
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 constitutional
amendment by the exercise of constituent power under Article F
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 that it is
impermissible to destroy Articles 14 and 15 or abrogate or en bloc G
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.
H
504 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B 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 beyond the
constituent power in the sense that the constituent power cannot
C 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 form
part of the basic structure.
xxx xxx xxx
D 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 power of
framing the Constitution known as constituent power and the nature
of constituent power vested in Parliament under Article 368. By
E 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
F
(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)
G 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 tests 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
H judgment in some detail.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 505
[R. F. NARIMAN, J.]
38. The majority judgment of three learned Judges by A
Venkatachaliah, J. sets out Paragraph 7 of the 10th 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
B
jurisdiction of all courts, was said to have required ratification by the
States and the 10th Schedule, not having been ratified by the States, it
was urged that the entire amendment would be infirm on this count.
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 C
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 D
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 E
(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 F
proviso to Article 368(2) of the Constitution and would require to
be ratified by the Legislature of the States before the 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
G
also the entire Bill resulting in the Constitution (Fifty-second
Amendment) Act, 1985, stands vitiated and the purported
amendment is abortive and does not in law bring about a valid
amendment.
H
506 SUPREME COURT REPORTS [2021] 5 S.C.R.
A Or whether, the effect of such non-compliance invalidates
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
B 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
C 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
D 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
E the Constitution required ratification under the said 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 Articles
132 and 136. Article 31-A aims at saving laws providing for
F the compulsory acquisition by the State of a certain kind of
property from the operation of Article 13 read with other
relevant articles in Part III, while Article 31-B purports 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
G
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
H of case has been excluded from the purview of Part III and
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 507
[R. F. NARIMAN, J.]
the courts could no longer interfere, not because their powers A
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 (Seventeenth B
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)
C
“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?”
D
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 to the
amendment made by the impugned Act, it would be clear that
Parliament is seeking to amend fundamental rights solely with E
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 F
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 G
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
H
508 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 the
petitioners. The changes in Chapter IV of Part V and Chapter V
B
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 necessary to
change the language of Articles 136 and 226 of the Constitution
to attract the proviso. If in effect these articles are rendered
ineffective and made inapplicable where these articles could
C 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
D 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 curtails the
E 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 proviso and
ratification was necessary. Accordingly, on Point (B), we hold:
F “That having regard to the background and evolution of the
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
G 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 the entire 10th
H Schedule to be constitutionally infirm as follows: -
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 509
[R. F. NARIMAN, J.]
156. Prima facie it would appear that Paragraph 7 does seek to A
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
B
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. C
State of Rajasthan [(1965) 1 SCR 933] that the effect of such
total exclusion of the jurisdiction of the Supreme Court and the
High Courts does not make a change in Articles 136, 226 and
227. A close reading of these decisions indicates that instead of
supporting this contention, they do in fact negative it.
D
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 under:
(SCR p. 108) E
“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 Articles
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 other F
relevant articles in Part III, while Article 31-B purports 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 G
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
H
510 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B 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 ground for
rejection of the argument therein was that the remedy in the courts
remained unimpaired and unaffected by the change and the change
C was really by extinction of the right to seek the remedy. In other
words, the change was in the right and not the remedy of
approaching the court since there was no occasion to invoke the
remedy, the right itself being taken away. To the same effect is
the decision in Sajjan Singh [(1965) 1 SCR 933], wherein Sankari
D 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
E of the right. If there is an abridgement or extinction of the right
which results in the disappearance of the cause of action which
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
F Singh [(1965) 1 SCR 933] apply. On the other hand, if the right
remains untouched so that a grievance based thereon can arise
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
G remedy and not in the subsisting right. To this latter category,
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.
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 511
[R. F. NARIMAN, J.]
160. The present case, in unequivocal terms, is that of destroying A
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
B
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 to 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 C
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.
D
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 his
assent.
E
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 exclusion of all other
authorities, is empowered to identify Socially and Economically Backward F
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 G
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 102nd Amendment Act is concerned, which are set
out in paragraph 10 of Justice Ashok Bhushan’s judgment as follows:
H
512 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 4. Whether the Constitution One Hundred and Second Amendment
deprives the State Legislature of its power to enact a legislation
determining the socially and economically backward classes and
conferring the benefits on the said community under its enabling
power?
B 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?
6. Whether, Article 342A of the Constitution abrogates States’
C power to legislate or classify in respect of “any backward 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:
D 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
E by the necessary majority of the State. The Parliament never
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 procedural
violation in passing the 102nd Constitutional Amendment cannot
F 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
G
following conclusions:
xxx xxx xxx
(27) It is, thus, clear as sun light that Parliamentary intention
discernible from Select Committee report and statement of Minister
H of Social Justice and Empowerment is that the intention of the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 513
[R. F. NARIMAN, J.]
Parliament for bringing Constitutional amendment was not to take A
away the power of the State to identify backward class in the
State.
xxx xxx xxx
(32) The Constitution 102nd Amendment Act, 2018 does not B
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 Justices
Bhushan and Nazeer and was joined by Justice L. Nageswara Rao and C
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 D
with respect to the process of identification of SEBCs and their
list. Necessarily, the power to frame policies and legislation with
regard to all other matters, i.e. the welfare schemes for SEBCs,
setting up of institutions, grants, scholarships, extent of reservations
and special provisions under Article 15(4), 15(5) and 16(4) are
E
entirely with by the State Government in relation to its institutions
and its public services (including services under agencies and
corporations and companies controlled by the State Government).
In other words, the extent of reservations, the kind of benefits,
the quantum of scholarships, the number of schools which are to
be specially provided under Article 15(4) or any other beneficial F
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 and
collecting data - if necessary, through statutory commissions, for
making recommendations towards inclusion or exclusion of castes
G
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.
H
514 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 state
legislative power in an oblique and peripheral manner would not
B 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
C 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
D 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)
E 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
F 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
G 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 respect to
identification of SEBCs, remains undisturbed.
xxx xxx xxx
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 515
[R. F. NARIMAN, J.]
(6) Re Point No. 6: Article 342A of the Constitution by denuding A
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, B
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. C
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 D
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” which would E
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, courts
can say that ratification is necessary even for amending the unentrenched
Article, for it directly necessitates a change in an entrenched Article.
But short of that we are of opinion that merely because there is some F
effect indirectly on an entrenched Article by amendment 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, G
necessitating amendment of “an entrenched Article”, it is clear that this
judgment cannot be considered to be good law especially after 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:
H
516 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
falling within the constitutional inhibition of the proviso. Article
226 gives power to the High Court throughout the territories in
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
C 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 result
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
D
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)
E 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 Article” which
F 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
G 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
H the proviso. The judgments above referred to speak of a ‘change-in
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 517
[R. F. NARIMAN, J.]
effect’ which would mean a change which, though not in the language A
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.
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 B
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). C
58. There can be no doubt whatsoever that 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. The question that arises D
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 the States’
legislative powers contained in Article 246(3) read with Entry 32 List II
of the 7th 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 E
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 (29A), in F
which the concept of sale of goods contained in Entry 54 was greatly
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 Constitution
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 G
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 the
constitutionality of the 46th Amendment need not detain us long.
This contention was based on the assumption that the legislatures H
518 SUPREME COURT REPORTS [2021] 5 S.C.R.
A of not less than one-half of the States which were in existence
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 since the
provisions contained in the 46th Amendment had the effect of
enlarging the scope of Entry 54 of List II of the Seventh Schedule
B
to the Constitution by empowering the legislatures of States 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 the fact
C whether the amendment of an entry in any of the lists of the
Seventh Schedule to the Constitution had the effect of either
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 States by
resolutions passed to that effect before such a Bill was presented
D
to the President for assent in view of the express provisions
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
E signed by the Secretary General of the Rajya Sabha which reads
thus:
“RAJYA SABHA SECRETARIAT PARLIAMENT HOUSE,
NEW DELHI
F 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
G
to the President. This Bill has been passed by the Houses of
Parliament and has been also ratified by the legislatures 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 Constitution.
Legislatures of the following States have passed resolutions
H ratifying the amendments:
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 519
[R. F. NARIMAN, J.]
(1) Haryana A
(2) Himachal Pradesh
(3) Karnataka
(4) Madhya Pradesh
(5) Maharashtra B
(6) Manipur
(7) Meghalaya
(8) Orissa
C
(9) Punjab
(10) Rajasthan
(11) Sikkim
(12) Tamil Nadu
D
A copy each of the letters received from these legislatures is
placed below.
sd/-
(Sudarshan Agarwal)
E
Secretary General
To
The Secretary to the President,
(Through the Secretary, Ministry of Law)”
F
The Attorney General has also produced before us the file
containing the resolutions passed by the legislatures of the 12 States
referred to in the Memorandum, set out above. We are satisfied
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 G
observe that there would have been no occasion for an argument
of this type being urged in court if at the commencement 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 that this
H
520 SUPREME COURT REPORTS [2021] 5 S.C.R.
A suggestion will be followed by the Central Secretariat hereafter
since we found that even the Attorney General was not quite sure
till the case was taken up for hearing that the Bill which had
become the 46th Amendment had been duly ratified by the required
number of States.
B 59. Indeed, H.M. Seervai, in his celebrated commentary
‘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 proviso,
C and the legislative lists are mentioned in cl. (c) of the 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)
D 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 7th Schedule of the
Constitution would also amount to a ‘change’ so as to attract the proviso
E to Article 368(2). It is not necessary, as has been contended by the
learned Attorney General, 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
F 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
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 521
[R. F. NARIMAN, J.]
changes have been made in effect in Entry 32 List II of the Constitution A
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
B
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.
62. Judged by these principles, it is now necessary to analyse
Part IXB of the Constitution of India, as inserted by the Constitution 97 th
Amendment Act. As the Statement of Objects and Reasons of the C
Constitution 97th Amendment Act shows, it is acknowledged that the
subject ‘co-operative societies’ is exclusively allotted to the State
legislature under Entry 32 of the State List, as a result of which,
considering the need for reform in the Co-operative Societies Acts of
the States, consultations with the State governments have been held. D
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 powers of the State
legislatures in that such legislations by the States would now have to E
conform to the newly inserted part.
63. Part IX B of the Constitution consists of Articles 243ZH to
243ZT.
64. Article 243ZH is the definition Article which defines co- F
operative societies in sub-clause (c) as meaning society registered 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 society 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 G
applies to incorporation, regulation and winding up of a co-operative
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 laws H
522 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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.
B Further, the State law must compulsorily provide for
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 elected
C 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 the
D 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
E therein makes it clear that the State legislature has to 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
F 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 societies
have to be audited only by such persons or firms.
G 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
H returns within the specified period of six months of the close
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 523
[R. F. NARIMAN, J.]
of every financial year, indicating the list of matters set out A
in the said provision.
X. Under Article 243ZQ, the Legislature of a State may make
provisions for offences relating to co-operative societies
and penalties for such offences, provided that under sub-
clause (2), in respect of five separate subject matters, the B
Legislature of a State must mandatorily include such subject
matters.
65. From all the above, 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 C
a large number of curtailments. Indeed, Article 243ZI specifically
mandates that the exclusive legislative power contained in Entry 32 List
II of the 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 D
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: E
27. Article 243-ZT of the Constitution requires the laws relating
to cooperative societies in force in the States prior to the
commencement of the Amendment Act to be in tune with and in
terms of the constitutional concept and set-up of cooperative
societies. In fact, a period of one year has been provided in the F
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 competent
legislature or authority to suitably amend the existing provisions in G
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 in
Pratap Chandra Mehta case [(2011) 9 SCC 573]. H
524 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 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
B
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
C 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 Constitution (73rd
Amendment) Act, 1992 and Part IXA inserted into the Constitution by
D the Constitution (74th 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 Panchayats and
Municipalities are concerned, is set out as follows: -
List II—State List
E 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 73rd and 74th Amendments were sent
F 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
G 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 243O and Article
243ZG ousting the jurisdiction of the courts and thereby, in effect, curtailing
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 525
[R. F. NARIMAN, J.]
the provisions of Articles 136, 226 and 227 of the Constitution of India. A
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
B
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 C
submission of the respondent that, like the 73rd 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 97th Amendment cannot be assimilated with
legislative power, and that once the Constitution stands amended by D
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. E
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 F
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 that, therefore,
they had impliedly accepted the restrictions laid down in the said Part. G
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 H
526 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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.
73. It was then argued by Shri Venugopal, learned Attorney General
B for India, that the impugned judgment’s finding that one of the basic
features of the Constitution, the principle of federalism has been affected
was a finding that was unnecessary once it was found 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
C 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 violates the
basic structure doctrine as laid down in Kesavananda Bharati’s case
(supra).
D 74. We now come to an important argument made by Shri
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.
E 75. This necessarily brings us to whether the part dealing with
multi-State co-operative societies in Part IXB can be severed from the
part dealing with co-operative societies operating only within 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
F 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 10th Schedule would therefore operate. This was
held by the majority as follows: -
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 527
[R. F. NARIMAN, J.]
upheld. [See Kesavananda Bharati v. State of Kerala [(1973) A
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 B
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’ 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 C
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 assent. Such an Amendment D
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 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 E
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 amendments
which Parliament alone was not competent to make could be
declared invalid. F
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 G
Union, the Judiciary, the election of the President and the amending
power itself, which have a bearing on the States, the proviso
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 H
528 SUPREME COURT REPORTS [2021] 5 S.C.R.
A scope of the proviso is confined to the limits 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 be denied legitimacy on the ground
alone of the company it keeps. The main part of Article 368(2)
B
directs that when a Bill which has been passed by the requisite
special majority by both the Houses 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
C 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 in the provisions
D
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 fall within its
E 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
F 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 these
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 529
[R. F. NARIMAN, J.]
given by the President in the absence of such ratification, the A
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 House and
by a majority of not less than two-thirds of the Members of that B
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 C
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 D
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 Amendment 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 E
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 than the substantive F
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 as in other G
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 H
530 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 amendment
B
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 doctrine of
severability, the amendment can be upheld in respect of the
amendments which do not require ratification and which are within
C 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 severed
D part was not the part of the law and whether 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
E 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
F 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
G 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
H inclusion of which the Bill containing the amendment requires
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 531
[R. F. NARIMAN, J.]
ratification from the rest of the provisions of such Bill which do A
not attract and require such ratification. Having regard to the
mandatory language of Article 368(2) that ‘thereupon 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.
B
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 the
Union Parliament cannot be overborne by the proviso which cannot
operate in that area. There is no justification for the view that C
even the rest of the provisions of the Constitution (Fifty-second
Amendment) Act, 1985, excluding Paragraph 7 of the Tenth
Schedule become constitutionally infirm by reason alone of the
fact that one of its severable provisions which attracted and
required ratification under the proviso to Article 368(2) was not D
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, E
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 truncated
by the excision of Paragraph 7.
76. Article 243ZR of Part IXB makes it clear that all the provisions F
of this Part which apply to multi-State co-operative societies would apply
subject to the modification that any reference to a “Legislature of a
State, State Act or State Government” shall be construed as a reference
to “Parliament, Central Act or the Central Government” respectively.
The learned Attorney General therefore argued that instead of having
two separate parts within Part IXB, one dealing with State co-operative G
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 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. H
532 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 amendment 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.
B
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
C 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:
D “The proposed new Part in the Constitution, inter alia, seeks to
empower the Parliament in respect of multi-State cooperative
societies and the State Legislatures in cases of other co-operative
societies to make appropriate law, laying down the following
matters, namely:-”
E (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
F 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 contended 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
G faintly suggested by learned counsel for 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.
We reject this argument for two reasons. If the doctrine of severability
H were not to apply for the afore-stated reason, then the majority judgment
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 533
[R. F. NARIMAN, J.]
in Kihoto Hollohan(supra) would be incorrect. This very reasoning A
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
B
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 C
Article 243ZS in its application to Union territories the same situation
would prevail as the application of Article 243ZR is not quite 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 D
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 “co-operative societies” is E
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 F
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, G
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
H
534 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B India is operative only insofar as it concerns multi-State co-operative
societies both within the various States and in the Union territories of
India. The appeals are accordingly disposed of.
K. M. JOSEPH, J.
1. I have gone through the draft Judgment authored by my learned
C 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, with the
mandate of the proviso to Article 368(2) of the Constitution of India.
D However, I regret my inability to concur with the view taken 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.
E 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 243ZT
unconstitutional. The other parts of the Ninety-Seventh Amendment were
found not to be affected. The ground was essentially that there was no
F 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 refer to
Part IXB:
G
“PART IXB
THE CO-OPERATIVE SOCIETIES
243ZH. Definitions.—In this Part, unless the context otherwise
requires,—
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 535
[K. M. JOSEPH, J.]
(a) “authorised person” means a person referred to as such in A
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; B
(c) “co-operative society” means a society registered 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 with C
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-President,
Chairperson, Vice-Chairperson, Secretary or Treasurer, of a D
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 E
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 F
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
G
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.
H
536 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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:
B 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.
C (2) The term of office of elected members of the board and its
office bearers shall be five years from the date of election and
the term of office bearers shall be coterminous with the term of
the board:
Provided that the board may fill a casual vacancy on the board by
D 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
E 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
F 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:
G 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)
H Notwithstanding anything contained in any law made by the
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 537
[K. M. JOSEPH, J.]
Legislature of a State, the election of a board shall be conducted A
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 B
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.
C
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 D
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
E
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 F
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 G
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 Banking
Regulation Act, 1949 shall also apply:
H
538 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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.
B (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
C 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-operative
societies and the auditing of such accounts at least once in each
D 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.
E (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
F 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
G 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
H general body meeting of every co-operative society shall be
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 539
[K. M. JOSEPH, J.]
convened within a period of six months of close of the financial A
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 B
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 C
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 D
the authority designated by the State Government including the
following matters, namely:—
(a) annual report of its activities;
(b) its audited statement of accounts;
E
(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 body F
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 G
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:—
H
540 SUPREME COURT REPORTS [2021] 5 S.C.R.
A (a) a co-operative society or an officer or member thereof
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 (b) any person wilfully or without any reasonable excuse
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
C 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
D (e) whoever, before, during or after the election of members
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 reference to
E “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
F 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
G
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-
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 541
[K. M. JOSEPH, J.]
operative societies in force in a State immediately before the A
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
B
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 Legislature, in regard to C
“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 relevant 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 D
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 Part XI of the
Constitution, which is contained in clause (b) to the proviso of Article
368(2).
E
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, F
vide Article 243ZR, has dealt with multistate cooperative societies, 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 G
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.
H
542 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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.
B 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 passed [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)].
C It is contended on behalf of the Respondent No. 1 and the learned Counsel
for the Intervenors that it may have been different, if the substantial
provisions, as contained in Article 243ZI to 243ZQ, which related to
cooperative societies, embraced by Entry 32 of List II, were expressly
enacted to apply to multistate cooperative societies and to the cooperative
D societies operating in the Union Territory, and thereafter, such provisions
were also made to apply to cooperative societies operating under 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 India and
E 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
F 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 subject of
consideration in numerous authorities. They may be summarised
G 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
H AIR 1957 SC 628
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 543
[K. M. JOSEPH, J.]
to be applied is whether the legislature would have A
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 B
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 C
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 D
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. E
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 F
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 G
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.
H
544 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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.
B
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.”
C
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
D therefor.—
(1) Notwithstanding anything in this Constitution, Parliament may
in exercise of its constituent power amend by way of addition,
variation or repeal any provision of this Constitution in accordance
with the procedure laid down in this article.
E (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 and
F voting, it shall be presented to the President who shall give 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
G article 279A or
(b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I
of Part XI, or
(c) any of the Lists in the Seventh Schedule, or
H (d) the representation of States in Parliament, or
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 545
[K. M. JOSEPH, J.]
(e) the provisions of this article, the amendment shall also A
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.
(3) Nothing in article 13 shall apply to any amendment made under B
this article.
(4) No amendment of this Constitution (including the provisions
of Part III) made or purporting to have been made under this
article whether before or after the commencement of section 55
of the Constitution (Forty-second Amendment) Act, 1976] shall C
be called in question in any court on any ground.
(5) For the removal of doubts, it is hereby declared that there
shall be no limitation whatever on the constituent power of
Parliament to amend by way of addition, variation or repeal the
provisions of this Constitution under this article.”
D
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 procedure provided
in Article 368; E
(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. F
13. In this case, the provisions of Article 243ZI to 243ZQ and
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
G
cease to be workable. The only question, which, therefore, arises 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). H
546 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
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.”
C
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 the following
discussion:
D “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 severability. The
E 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,
F 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,
G 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 affects the
remainder. A statute, it has been said, is judicially held to be
2
H (1992) Suppl.2 SCC 651
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 547
[K. M. JOSEPH, J.]
unconstitutional, because it is not within the scope of legislative A
authority; it may either propose to accomplish something prohibited
by the Constitution, or to accomplish some lawful, and even
laudable object, by means repugnant to the Constitution of the
United States or of the State. A statute may contain some such
provisions, and yet the same act, having received the sanction of
B
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 connected
with or dependent on others which are unconstitutional.” C
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 D
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] E
, 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? F
Such 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 G
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 assent. Such
an Amendment Act is within the competence of Parliament insofar H
548 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
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 doctrine of
B
severability can be applied it can be upheld as valid in respect of
the amendments within the competence of Parliament and only
the amendments which Parliament alone was not competent to
make could be declared invalid.
70. Is there anything compelling in the proviso to Article
C 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 except
and deal with a case which would otherwise fall within the general
language of the main enactment, and its effect is confined to that
D case” and that where “the language of the main enactment is
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 express terms”.
[See: Madras & Southern Mahratta Railway Company
Ltd. v. Bezwada Municipality [(1944) 71 IA 113, 122 : AIR 1944
E 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
F (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 proviso imposes an additional requirement of ratification of
the amendment which seeks to effect a change in those provisions
G before the Bill is presented for the assent of the President. It is
salutary that the scope of the proviso is confined to the limits
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 be denied
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 549
[K. M. JOSEPH, J.]
legitimacy on the ground alone of the company it keeps. The main A
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 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
B
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 in the C
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 fall
D
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 E
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 F
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 has been
passed in each House by the prescribed special majority. An G
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 H
550 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 Amendment
Act were validly made in view of Article 4 but the amendments in
B
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
C the doctrine of severability would result in elevating a procedural
limitation on the amending power to a level higher than the
substantive limitations.
xxx xxx xxx
75. In that case, it was found that Section 41 of the Bribery
D 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
E Commission. It was held that the legislature had purported to pass
a law which, being in conflict with Section 55 of the Order 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). Since
F 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 Royal
Assent, invalid and ultra vires”. Applying the doctrine of severability
G the Judicial Committee, however, struck down the offending
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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 551
[K. M. JOSEPH, J.]
it only had the effect of invalidation of a particular provision which A
offended against the limitation on the amending power. 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
B
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 as 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 C
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
D
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 amendment
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 doctrine of E
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.
F
76. The test of severability requires the Court to ascertain
whether the legislature would at all have enacted the law if the
severed part was not the part of the law and whether 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 G
‘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 H
552 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B
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)
C 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, whether 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
D 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
E The co-operative sector, over the years, has made significant
contribution to various sectors of national economy and 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
F 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 members.
Inadequate professionalism in management in many of the co-
operative institutions has led to poor services and low productivity.
G 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
H functioning and professional management.
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 553
[K. M. JOSEPH, J.]
2. The “co-operative societies” is a subject enumerated in Entry A
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
B
distribution of the fruits of development. It has, however, been
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 C
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 also
to ensure, their autonomous organisational set up and their
democratic functioning.
D
3. The Central Government is committed to ensure that the co-
operative societies in the country function in a democratic,
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 societies E
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 functioning,
democratic control and professional management of cooperative F
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:-
G
(a) provisions for incorporation, regulation arid winding up of co-
operative societies based on the principles of democratic member-
control, member-economic participation and autonomous
functioning;
H
554 SUPREME COURT REPORTS [2021] 5 S.C.R.
A (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;
B (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;
C (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
D 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 ensure the
E 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.”
F (Emphasis supplied)
17. From the Statement Objects and Reasons, the following is
discernible.
18. There were weaknesses found in safeguarding the interests
G 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
H
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 555
[K. M. JOSEPH, J.]
Seventh Schedule. That laws were made by the State Legislatures, were A
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
B
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.
19. The intention, therefore, discernible was that Parliament
intended to provide a uniform set of legislative norms and create rights, C
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. D
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, which actually E
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 provisions are so
inextricably mixed up that they cannot be separated from one another. It F
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.
G
22. 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 (supra), this Court,
after bearing in mind the Rules, apparently laid down in R.M.D.
H
556 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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 Objects and
Reasons, that Parliament was fully aware that Entry 32 clothed the
B 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 provisions. The
C 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
D 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
E 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
F 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
G 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, I would agree that the law must survive rather than
H perish. The question, however, is on the terms of the provisions in question
UNION OF INDIA v. RAJENDRA N. SHAH AND ANOTHER 557
[K. M. JOSEPH, J.]
(Articles 243QR and 243QS), and bearing in mind the principles, can A
they survive on their own, after the invalidation of Article 243ZH 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 B
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 C
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 D
societies subject to the modification that any reference 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 E
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: F
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.”
G
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. H
558 SUPREME COURT REPORTS [2021] 5 S.C.R.
A 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
B 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.
C 30. 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,
D 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
E 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 with the
view taken by my learned and esteemed Brother in regard to the
application of the Doctrine of Severability.
F 32. In this view of the matter, the Appeals are dismissed.
Devika Gujral Appeals disposed of.
G
H
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