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BACKGROUND

  • The 97th Constitutional Amendment was passed by the Central Government in 2011 that dealt with encouraging the economic activities of cooperative societies.
  • The said amendment was challenged before the Gujarat High Court through a PIL by one Mr. Rajendra N. Shah, an activist associated with NGO Consumer Protection Analytic Committee, in 2012.
  • The Gujarat High declared the challenged amendment as unconstitutional on the grounds that it was ultra vires to the provisions laid down in Article 368(2) of the Constitution.

CASE BEFORE SUPREME COURT

  • The Central Government filed appeals before the Apex Court challenging the order of the Gujarat High Court and in 2014 the Court allowed the Special Leave Petition of the Government but stayed the judgment of the High Court.
  • On 20th July 2021, the Supreme Court disposed of the appeals filed by the Central Government.

SUBMISSIONS

  • K.K. Venugopal, the Attorney General for India, submitted that the challenged Part IXB of the Amendment was divided into two parts, one dealing with multi-state co-operative societies and the other part dealt with cooperative societies which exist and operate within a particular state.
  • He also submitted that 17 out of 28 states have enacted legislations after the 97th Amendment was passed and confirmed with provisions laid down in Part IXB and no Government has come forward to challenge it as it was passed after consultation with the State Governments.
  • The counsel for the respondent submitted that after reading Part IXB of the Constitution, it can be noticed that the unrestricted power of the states, before the Amendment came into place, was being restricted under Part IXB, after the Amendment.

JUDGEMENT

  • The Court disposed of the appeals filed by the Union of India and upheld the validity of the High Court judgment, except to the extent that it entirely strikes down the Part IXB of the Constitution.
  • The Court also clarified that the Amendment is operative only in the cases where it concerns multi-state cooperative societies, both within the various States and in the Union territories of India.
  • The Court observed that exclusive legislative power given to the state, under the 2nd list of the Seventh Schedule, is an essential constitutional principle and forms the basic structure of the Constitution.

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