Union of India v. Rajendra N. Shah: the 97th Amendment, Article 368(2), and the limits of Parliament's power over co-operative societies

The judgment of 20 July 2021 in Union of India v. Rajendra N. Shah is a federalism case dressed as a co-operative-societies case. Its subject matter — the governance of primary agricultural credit societies, milk unions, and sugar co-operatives — is unglamorous. Its method is not: it is one of a short list of Supreme Court decisions that has actually struck down a constitutional amendment, and it did so by applying, with some rigour, a ratification requirement in Article 368(2) that had rarely been tested to destruction.

The Ninety-Seventh Amendment

The Constitution (Ninety-Seventh Amendment) Act, 2011 did three things. It added the words "or co-operative societies" to Article 19(1)(c), extending the fundamental right to form associations to cover the right to form co-operative societies. It inserted Article 43B into the Directive Principles, directing the State to promote voluntary formation, autonomous functioning, and democratic control of co-operative societies. And it inserted an entirely new Part IX-B — Articles 243ZH to 243ZT — laying down, in granular constitutional detail, how co-operative societies were to be constituted, how their boards were to be elected, how long a board's term could run, when supersession or suspension was permitted, what qualifications and disqualifications applied to board members, and how audits and returns were to be conducted.

That level of prescriptive detail is what made Part IX-B constitutionally unusual. Part IX (Panchayats) and Part IX-A (Municipalities) had earlier inserted comparably detailed constitutional codes for local self-government — but local self-government is a subject on which the Union has a recognised, longstanding role. Co-operative societies are different: Entry 32 of List II, the State List, assigns "incorporation, regulation and winding up of… co-operative societies" to the States alone, subject only to Entry 44 of List I, which gives Parliament power over co-operative societies "with objects not confined to one State."

The challenge

Rajendra N. Shah, associated with a Gujarat-based consumer-protection body, filed a writ petition before the Gujarat High Court in 2012 seeking to quash Part IX-B as ultra vires the Constitution. The Gujarat High Court struck the provisions down in April 2013 for want of ratification under Article 368(2). The Union of India appealed to the Supreme Court, and the appeal — Civil Appeal Nos. 9108-9109 of 2014 — sat for several years before being decided by a three-judge Bench of Nariman, K.M. Joseph and Gavai, JJ.

The Article 368(2) proviso

Article 368(2) permits Parliament to amend the Constitution by the ordinary special-majority procedure for most provisions. But its proviso carves out a category of amendments that additionally require ratification by the Legislatures of not less than one-half of the States before the Bill is presented for the President's assent. That category includes any amendment that seeks to make a change in, among other things, the provisions dealing with the distribution of legislative powers between the Union and the States — the Seventh Schedule Lists.

The Court's reasoning proceeded in two steps. First, "co-operative societies" is a subject that falls, for single-State societies, within the exclusive legislative domain of the States under Entry 32, List II. Second, Part IX-B — by constitutionally mandating the composition, tenure, election procedure, and supersession conditions for co-operative societies' boards — did not merely regulate an incidental matter; it directly curtailed the plenary legislative field the States possessed over that Entry, effectively converting a State subject into one governed by a constitutionally entrenched code that ordinary State legislation could no longer override. That, the majority held, amounted to a change in the substance of Entry 32 as it operated in relation to the States, triggering the ratification requirement.

Since the record showed no ratification by the States — the Amendment Bill had been circulated for comment, not ratification, before enactment — the Amendment could not validly rewrite the constitutional position for subjects falling within the exclusive State field.

Severability: multi-State co-operative societies survive

Having found the ratification defect, the Court did not treat Part IX-B as void in its entirety. It applied the doctrine of severability — ordinarily deployed to sever an unconstitutional provision of an ordinary statute from the valid remainder, here applied to a constitutional amendment — and asked whether Part IX-B could operate, shorn of its application to single-State societies, without becoming unworkable.

The majority held that it could. Multi-State co-operative societies — those with objects not confined to one State, and Union Territory co-operative societies — fall within Parliament's own legislative competence under Entry 44, List I, a field where Parliament required no State ratification to legislate in the first place. The Multi-State Co-operative Societies Act, 2002 already occupied that field under ordinary legislative power. Part IX-B's governance code, applied only to that category, did not touch the States' Entry 32 domain and required no ratification. The provisions were, in the majority's assessment, capable of standing on their own for multi-State societies even with the single-State application excised. Part IX-B accordingly survives — but only for multi-State co-operative societies and co-operative societies in Union Territories.

The amendments to Article 19(1)(c) and the insertion of Article 43B were left undisturbed; neither directly restructures the States' Entry 32 field in the way Part IX-B's operative provisions did.

The partial dissent: Justice K.M. Joseph

K.M. Joseph, J. agreed that Part IX-B, insofar as it governed single-State co-operative societies, required and lacked Article 368(2) ratification. He parted company with the majority on severability. His view was that Part IX-B's provisions on multi-State societies and single-State societies were drafted as an integrated scheme, cross-referencing and depending on one another, such that excising the single-State application left a truncated, unworkable fragment rather than a coherent, freestanding code for multi-State societies alone. On that reasoning, he would have struck down the whole of Part IX-B — not merely its single-State application — while leaving the Article 19(1)(c) and Article 43B changes intact, as the majority did.

The result is a 2:1 outcome on the scope of the remedy, arrived at on a foundation — the ratification failure itself — on which all three judges agreed.

Why the case matters beyond co-operatives

Rajendra N. Shah is cited less for co-operative-society doctrine than for the proposition it establishes about Article 368(2): that the ratification proviso protects the substance of the States' legislative domain, not merely the printed text of the Seventh Schedule Entries, and that a constitutional amendment which functionally converts a State-exclusive subject into a Union-prescribed constitutional code can be struck down for want of ratification even where the Entry itself is never amended. It sits alongside the basic-structure line of cases as a second, narrower check on the amending power — one keyed specifically to federalism rather than to a case-by-case judicial identification of "essential features."

For legislative drafters, the practical lesson is that inserting granular, Panchayat/Municipality-style constitutional codes for other State subjects — housing societies, agricultural marketing boards, or any other Entry 32-adjacent field — carries the same ratification risk unless the amendment is genuinely confined to the Union's own field of competence.

Related on Valkya

• Kesavananda Bharati v. State of Kerala
• Minerva Mills v. Union of India
• In re Berubari Union (1960): the Preamble, and the cession of territory under Article 368
• I.C. Golaknath v. State of Punjab: Fundamental Rights beyond the amending power

Sources

• SCC OnLine Blog, "Part IX-B of Constitution relating to cooperative societies unconstitutional for want of ratification by half of the States; Provisions relating to multi-State cooperative societies severable and valid: SC"
• Bar & Bench, "Co-operative societies: Supreme Court strikes down Part IXB of 97th constitutional amendment"
• LiveLaw, "Supreme Court Strikes Down 97th Constitutional Amendment To The Extent It Relates To Cooperative Societies"