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Union of India v. Rajendra N. Shah

Supreme Court of India, 20 July 2021, 3 judges

Part IXB, inserted by the Constitution 97th Amendment, needed ratification by half the States because it significantly curtailed the States' exclusive power over co-operative societies; without ratification it is inoperative except for multi-State co-operative societies.

Facts

The Constitution (Ninety-Seventh Amendment) Act, 2011 amended Article 19(1)(c), inserted Article 43B and added Part IXB, Articles 243ZH to 243ZT, laying down detailed requirements that State laws on co-operative societies had to follow, such as limits on the number of directors, reservation of seats, a five-year term, conditions for supersession, audit and penalties. It was passed by Parliament, received assent on 12.01.2012 and came into force on 15.02.2012, but was not ratified by the State Legislatures. In a public interest writ petition, a division bench of the Gujarat High Court on 22.04.2013 declared Part IXB ultra vires for want of ratification under the proviso to Article 368(2), without affecting the changes to Article 19(1)(c) and Article 43B. The Union of India appealed.

Questions before the Court

  1. Did Part IXB require ratification by the State Legislatures under the proviso to Article 368(2), though Entry 32 of List II was not amended in terms?
  2. If so, can the parts of Part IXB dealing with multi-State co-operative societies and Union territories be severed and saved?

What the Court held

  • A significant enlargement or curtailment of a subject in a field reserved exclusively to the States is in effect a change in a legislative list. Form gives way to substance: curtailing Entry 32 List II indirectly, by adding a new Part, attracts the proviso to Article 368(2) as much as amending the Entry itself.
  • Part IXB significantly curtails the States' exclusive power under Article 246(3) read with Entry 32 List II. So far as it applies to co-operative societies operating within a State, it required ratification under clauses (b) and (c) of the proviso to Article 368(2), and without ratification it cannot operate.
  • Applying severability as in Kihoto Hollohan, Article 243ZR treats multi-State co-operative societies as a separate scheme within Part IXB that stands and is workable on its own. Part IXB is therefore operative insofar as it concerns multi-State co-operative societies, in the States and in the Union territories.
  • Part IXB does not apply to co-operative societies confined to a Union territory. The High Court's judgment was upheld except to the extent that it struck down the whole of Part IXB.

Why it matters

The judgment holds that a constitutional amendment which significantly curtails a State List entry, even without amending the entry in words, needs ratification by half the States under the proviso to Article 368(2). It applies the severability approach of Kihoto Hollohan to save Part IXB only for multi-State co-operative societies. K.M. Joseph, J. dissented on severability.

In the Court's words

Copied from the official judgment; each passage links to its page.

“It is of no moment that one method is chosen or preferred to another so long as Entry 32 List II is curtailed either by adding or deleting words in Entry 32 itself or by doing so through an indirect methodology, namely, adding a new definition clause in Article 366 or adding a new part to the Constitution of India.”
R.F. Nariman, J.Page 69 of the judgment
“it is clear that by curtailing the width of Entry 32, List II of the 7th Schedule, Part IXB seeks to effect a significant change in Article 246(3) read with Entry 32 List II of the 7th Schedule inasmuch as the State's exclusive power to make laws with regard to the subject of co-operative societies is significantly curtailed thereby directly impacting the quasi-federal principle contained therein. Quite clearly, therefore, Part IXB, insofar as it applies to co-operative societies which operate within a State, would therefore require ratification under both sub-clauses (b) and (c) of the proviso to Article 368(2) of the Constitution of India.”
R.F. Nariman, J.Page 74 of the judgment
“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 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.”
R.F. Nariman, J.Page 89 of the judgment

Provisions interpreted

Related judgments

  • Follows Kihoto Hollohan v. Zachillhu (1992)“If the doctrine of severability were not to apply for the afore-stated reason, then the majority judgment in Kihoto Hollohan (supra) would be incorrect.” (page 87)

Case and bench

Parties
Union of India v. Rajendra N Shah
Case
Civil Appeal Nos. 9108-9109 of 2014 with connected Civil Appeals
Decided
20 July 2021
Bench
R.F. Nariman, B.R. Gavai, K.M. Joseph
Opinions
Majority 2:1 on severability. Judgment of R.F. Nariman, J. (for himself and B.R. Gavai, J.). K.M. Joseph, J. agreed that the provisions on State co-operative societies were invalid for want of ratification but dissented on saving Part IXB for multi-State co-operative societies and would have dismissed the appeals.

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