Rajendra N. Shah vs Unknown
decided
on 22.04.13 by Gujrat High Court Writ Petition (PIL) No – 166 of 2012
Bench: Mr Bhaskar
Bhattacharya and J.B. Pardiwala
DRT Solutions
Citation –
DRTS-020-Rajendra
Shah vs Unknown-2013
We have now
numbered the Judgments published on this web site as DRTS-00.
Accordingly all the judgments published so far have been numbered. The judgment
on this page is numbered as DRTS-020.
Comments by DRT Solutions
Gujrat High Court Judgment of 2013 laying down that Securitization Act not
Applicable to Co-operative Banks
Utility of this Judgment – Wherever the co-operative banks have invoked or going
to invoke the Securitization Act, such action can be stayed by DRTs.
Comments
The full text of
the judgment is given below which is self explanatory. Important portions have
been marked in Red and are reproduced below:-
22.
Thus, the amendment is violating the basic structure of the Constitution so long
as the subject of Co-Operative Societies is in the List II of the 7th
Schedule and at the same time, the provisions of Article 368(2) has not been
complied with. The Constitution has not permitted curtailment of the power of
the State Legislatures over the subject mentioned in List II without taking
recourse to Article 368 (2).
27. We,
therefore, allow this Public Interest Litigation by declaring that the
Constitution [97th amendment] Act, 2011 inserting part IXB containing
Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking
recourse to Article 368(2) of the Constitution providing for ratification by the
majority of the State Legislatures. This order, however, will not affect other
parts of the Constitution [97th amendment] Act, 2011.
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Gujarat High Court
Rajendra N Shah vs Unknown on 22 April, 2013
Bench:
Mr.Bhaskar Bhattacharya and J.B.Pardiwala
RAJENDRA N SHAH....Applicant(s) V/S UNION OF INDIA, CHIEF DIRECTOR(CO-OPERATION)
GOVERNMENT OF STATE OF GUJRAT
C/WPPIL/166/2012
CAV
JUDGEMNT
IN
THE
HIGH COURT OF GUJARAT AT AHMEDABAD
WRIT
PETITION (PIL)
NO.
166 of 2012
FOR
APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE
MR.
BHASKAR BHATTACHARYA
and
HONOURABLE MR.JUSTICE J.B.PARDIWALA
============================================================
1
Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To
be referred to the Reporter or not ?`
3
Whether their Lordships wish to see the fair copy of the judgment ?
4
Whether this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order made thereunder ?
5
Whether it is to be circulated to the civil judge ?
=========================================================
RAJENDRA N SHAH
Versus
UNION
OF INDIA & ANR.
================================================================
Appearance:
MR KI
SHAH with MR VISHWAS K SHAH with MR MASOOM K SHAH, ADVOCATE for the Applicant.
MR PS
CHAMPANERI, ASST SOLICITOR GENERAL for the Opponent No. 1
MR PK
JANI, GOVERNMENT PLEADER for the Opponent No. 2
================================================================
CORAM:
HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA
and
HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date :
22/04/2013
CAV
JUDGEMNT
(PER :
HONOURABLE THE CHIEF JUSTICE MR. BHASKAR
BHATTACHARYA)
1. By
this Public Interest Litigation, the writ-petitioner has prayed for quashing of
the Constitution [97th amendment] Act, 2011 introducing part IXB, as ultra vires
the Constitution of India.
2. The
case made out by the writ-petitioner is that the Constitution [97th amendment]
Act, 2011 was passed by the Lok Sabha on 22nd December 2011 and the same was
passed by the Rajya Sabha on 28th December 2011. The President of India bestowed
assent to that amendment on 12th January 2012 and the said
notification was published in the gazette of India of 13th January
2012 and the amendment came into force on 15th February 2012.
2.1
According to the petitioner, the power under Article 368 of the Constitution of
India itself is the basic structure of the Constitution of India and the fact
that by the impugned constitutional amendment, the procedure prescribed in the
article 368(2) of the Constitution, which recognizes the federal structure of
the Constitution as one of the basic structures, has not been followed, is
violative of the Constitution. The petitioner contends that the subject-matter
Co-operative Societies does not fall in the 7th Schedule Entry 45 of List I of
the Constitution and those are specifically excluded from entry no. 43 of List
1. Therefore, according to the petitioner, the State legislature is the only
competent authority in law to enact the laws for the co-operative societies and
on that ground, the proposed amendment should be set aside as violative of the
Constitution of India as the consent of the majority of the State Legislatures
was not received before presenting the Bill proposing the amendment to the
President of India.
2.2
According to the petitioner, it is settled law that a constitutional authority
cannot do something indirectly which it is not permitted to do directly and if
there is a constitutional provision inhibiting the constitutional authority from
doing an act, such provision cannot be allowed to be defeated by adopting a
subterfuge. By the impugned constitutional amendment, according to the
petitioner, the Parliament, a creature of the Constitution, and not
vice-a-versa, has violated the basic structure of the Constitution by not
complying with the requirements of Article 368 (2) of the Constitution.
3.
This Court issued notices upon the parties including the learned Attorney
General of India, and in response to the notice, Mr. Champaneri, the learned
Assistant Solicitor General of India, has appeared. The submissions of the Union
of India may be summarized thus:
(A).
The only limitation on the Parliament in exercise of the constituent power to
amend the Constitution in the matters enumerated in clauses (a), (b), (c), (d),
and (e) of the proviso to sub-Article (2) of Article 368 is that, such amendment
shall also require to be ratified by the Legislatures of not less than one half
of the States by the resolution to that effect passed by those Legislatures
before the bill making provision for such amendment is presented to the
President for his assent.
(B).
Sub-Article (1) of Article 368 has been inserted by the Constitution (24th
amendment) Act, 1971 and the original Article 368 has been re-numbered as clause
(2) of Article 368 whereas the words specified in parts A & B of the First
Schedule from the proviso were omitted by the Constitution [97th Amendment] Act,
1956.
(C).
Sub-Article (3) provides that nothing in Article 13 shall apply to any amendment
made under this Article. This clause is inserted by the Constitution (24th
amendment) Act, 1971. Sub-Article (4) and Sub-Article (5) of Article 368 which
had been inserted by the Constitution (42nd amendment) Act, 1976 have been
declared to be invalid by the Constitution Bench of the Supreme Court of India
in the case of MINERVA MILLS V. UNION OF INDIA, reported in AIR 1980 SC 1789 on
the ground that these clauses which remove all limitation upon the power of the
Parliament to amend the Constitution and precluded a judicial review of the
Constitution Amendment Act, on any ground, sought to destroy an essential
feature or basic structure of the Constitution.
(D).
The Constitution lays down different modes of amendment of its various
provisions, which are as under:
(i). A
very large number of provisions are open to alteration by the Union Parliament,
by simple majority like the matters referred to in Articles 2 4, 169 and 240.
(a).
Creation of new States or reconstitution of existing States.
(b).
Creation or abolition of upper chambers in the States.
(c).
Administration of scheduled areas and Scheduled Tribes (Part VIII of the 5th
Schedule and Part XXI of the 6th Schedule.
(ii).
If, however, a matter is not covered by this Article, like cessation of
territory to a foreign power, that can be effected only by enacting an Amendment
Act under Article 368.
(iii).
In the case of few matters relating to the federal structure of the
Constitution, a special mode is prescribed, viz. that the Bill for amendment
must be passed by two-third majority of the members of each House present and
voting (such majority being more than 50% of the total membership of each House)
and then ratified by the Legislatures by one-half of the States. Those matters
are:
(a).
The manner of election of President,
(b).
Extent of Executive Powers of the Union and the States,
(c ).
The Supreme Court and the High Courts,
(d).
Distribution of Legislative powers between the Union and the States,
(e).
Representation of States in Parliament, and,
(f).
The provisions of Articles 368 itself.
(E).
Article 368 does not prescribe the form in which the amendments may be made and
the arrangement may, therefore, add a provision to the Constitution without
altering its existing text in view of the decision rendered by the Supreme Court
in the case of SHANKARIPRASAD vs. UNION OF INDIA reported in AIR 1951 SC 458.
(F).
In view of the aforesaid decision in the case of Shankariprasad [supra], the
decision prevailing was that no part of our Constitution is unamendable and that
the Parliament may, by passing a Constitution Amendment Act, in compliance with
the requirement of Article 368, amend any provision of the Constitution
including the fundamental rights of Article 368 itself. However, in the case of
Golaknath reported in AIR 1967 SC 1643, the majority of six Judges of a Special
Bench of 11 Judges overruled the previous decision of the Supreme Court in the
case of Shankariprasad and took a view that though there is no express provision
from the ambit of the Article 368, the fundamental rights included in Part-III
of the Constitution cannot, by their very nature, be subject to the process of
amendment provided for in Article 368 and that if any of such rights is to be
amended, a new Constituent Assembly must be convened for making a new
Constitution or radically changing it.
(G).
The majority decision on Golaknaths case was superseded by the Constitution (24th
amendment) Act, 1971, by inserting clause (4) in Article 13 and clause (1) in
Article 368 as a result of which an amendment of the Constitution, based in
accordance with the Article 368, may not be a law within the meaning of Article
13 and the validity of the Constitution Amendment Act shall not be open to
question on the ground that it takes away or affects a fundamental right. This
amendment has been held to be valid.
(H).
The decision of Golaknaths case has been overruled by the latter Full Bench of
the Supreme Court in the case of Keshavnanad v. State of Kerala reported in AIR
1973 SC 1461.
(I).
Clauses (4) and (5) are inserted in Article 368 by the 42nd Amendment Act, 1976
and the insertion of the said clauses by 42nd Amendment Act, 1976 provides that:
(a).
There is no limitation express or implied, upon the amendment power under
Article 368 (1) which is a constituent power, and,
(b). A
Constitution Amending Act would not, therefore, be subject to judicial review on
any ground.
The
said amendment, in turn, came to be superseded by the decision of a Constitution
Bench of the Supreme Court in the case of MINERVA MILLS [supra].
The
said clauses (4) and (5) of Article 368 has been invalidated by the Supreme
Court in the said case on the ground that these provisions introduced by the
42nd amendment Act, 1976, sought to exclude judicial review, which was one of
the basic features of the Indian Constitution, as held in the Kesavanands case
and so long as this decision stands, all the Constitution Amendment Acts shall
be open to review by the Supreme Court to see whether it affected any of the
basic features of the Constitution substantively or the procedural safeguards
included in other clauses of Article 368.
(J).
Thus, the power to amend Constitution is vested in the Parliament and while
exercising the powers under Article 368, the Parliament would not be subject to
the limitations which curb its Legislative powers to make laws under Articles
245-246 because the amending power conferred by Article 368 is constituent power
as held by the Apex Court in the case of SASANK vs. UNION OF INDIA reported in
AIR 1981 SC 522.
(K).
By the amendment, by insertion of Chapter IXB, Article 19(1) (c) has been
amended and now the co-operative societies have also been included in Part-III
of the Constitution in Article 19(1) (c) and therefore, there is an addition in
the fundamental rights so far as addition of fundamental rights guaranteed under
19(1) (c) has been extended to the Co-Operative Societies.
(L).
Therefore, Article 368 (2) proviso has to be read in its strict sense and it is
apparent that the amendment under challenge is not changing any of the matters
enumerated in clauses (a) to (e) of the provision.
(M).
The Parliament has exercised its constituent powers, which is distinct from its
legislative power and by the 97th amendment, the Parliament has not legislated
on the subject, but in its constituent power has amended the Constitution by
addition of guarantee of the fundamental rights in favour of the Co-Operative
Societies. By this amendment, the Parliament has not attempted to change the
basic features of the Constitution. The Principles of Federalism are also not
altered. Therefore, the challenge to the 97th amendment in Constitution is
misconceived and has no merits, and therefore, the writ-petition deserves to be
dismissed.
4. The
State Government, although has not filed any affidavit, Mr. Jani, the learned
Government Pleader appearing on behalf of the State, has supported the
contentions of Mr. Champaneri, and has prayed for rejection of the
writ-application.
5.
Therefore, the question that falls for determination before us is whether the
impugned amendment violates any of the provisions of the Constitution of India.
6. In
order to appreciate the aforesaid contention, it will be profitable to refer to
part IXB of the Constitution of India containing Articles 243ZH to 243ZT, which
are quoted below:
243ZG.
Bar to interference by courts in electoral matters.Notwithstanding anything in
this Constitution,
(a)
the validity of any law relating to the delimitation of constituencies
or the allotment of seats to such constituencies, made or purporting to be made
under article 243ZA shall not be called in question in any court;
(b)
no election to any Municipality shall be called in question except by an
election petition presented to such authority and in such manner as is provided
for by or under any law made by the Legislature of a State.
243ZH.
Definitions.—In this Part, unless the context otherwise requires,--
[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 is entrusted to;
[c]
co-operative society means a society registered or deemed to be registered under
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 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 co-operatives;
[e]
office bearer means a President, Vice-President, 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 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;
[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.-- 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.
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-opeative 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 members from such class or 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:
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 co-option of
persons to be members of the board having experience 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 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 co-operative 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 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]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 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 election.
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 suspension for a period exceeding six
months:
Provided that the board may be superseded or kept under suspension in case--
[i] of
its persistent default;
[ii]
of negligence in the performance of its duties; or
[iii]
the board has committed any act prejudicial to the interests of the co-operative
society or its members; or
[iv]
there is a stalement in the constitution or functions of the board; or
[v]
the authority or body as provided by the Legislature of a 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 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 [10 of 1949] shall
also apply:
Provided also that in case of a co-operative society, other than a multi-State
cooperative 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 co-operative society shall arrange for conduct of elections
within the period specified in clause [1] and handover 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.—
[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 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:
Provided that such auditors or auditing firms shall be appointed from a panel
approved by a State Government or any 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.
[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.--
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.
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 co-operative
society kept in regular transaction of its business with such member.
[2]
The Legislature of a State may, by law, make provisions to ensure the
participation of members in 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.
[3]
The Legislature of a State may, by law, provide for co-operative education and
training for its members.
243ZP.
Returns.--
Every
co-operative society shall file returns, within six months of the close of every
financial year, to the authority designated by the State Government including
the following matters, namely:-
[a]
annual report of its activities;
[b]
its audited statements of accounts;
[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 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 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:--
[a] a
co-operative society or an officer or member thereof wilfully makes a false
return or furnishes false information, or any person willfully not furnishes any
information required from him by a person authorised in this behalf under the
provisions 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 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 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.
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 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
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 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-operative societies in force in a State
immediately 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.
xxx
xxx xxx
6.1
The enabling provision for amendment of the Constitution being Article 368 is
also quoted below:
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, 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 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
(a)
article 54, article 55, article 73, article 162 or article 241, 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
(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 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 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 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.
7.
After hearing the learned counsel for the parties and after going through the
provisions quoted above and also the other provisions of the Constitution of
India, it appears that only the State Legislature is authorized to enact law
relating to Co-Operative Societies as would appear from the fact that it is
placed at item No. 32 in List II-STATE LIST in the Seventh Schedule of the
Constitution.
8. We
do not dispute for a moment that by amending the provisions of the Constitution
of India, the Parliament can bring the said item from List-II of the 7th
Schedule to List I UNION LIST or List III CONCURRENT LIST and in such
circumstances, the Parliament will also have right to legislate law relating to
Co-Operative Societies. However, in order to bring such amendment for shifting
an item from List-II of the 7th Schedule to List I UNION LIST or List III
CONCURRENT LIST of the 7th Schedule, such amendment is required to be
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
voting the amendment and such amendment shall also be required 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.
9. In
the case before us, admittedly the formality indicated in Article 368 (2) of the
Constitution for taking ratification has not been complied with before
presenting it to the President for assent. The Central Government, in its
affidavit has stated that in the conference of the Ministers of the State, the
Ministers approved such amendment and at the same time, there being no amendment
of the List II of the 7th Schedule, Article 368(2) cannot have any application.
10.
Mr. Champaneri, the learned Assistant Solicitor General of India, and Mr. Jani,
the learned Government Pleader appearing for the State of Gujarat, have
laboriously contended before us that by the amendment impugned, the power of the
State Legislature to enact law relating to Co-Operative Societies has not been
taken away, and thus, the provisions of Article 368(2) are not applicable.
11. It
appears from the provisions contained in Article 243.ZG to Article 243ZT
introduced by way of the impugned amendment that though there is no amendment of
List-II of the Constitution by taking aid of Article 368(2) of the Constitution,
by incorporating Chapter IXB starting from Article 243.ZG and ending with
Article 243ZT, various restrictions have been imposed upon the State
Legislatures while enacting law relating to Co-Operative Societies which was
earlier unfettered prior to the incorporation of Chapter IXB. For instance, in
Article 243ZI, it is said that 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 but such law must be subject to the provisions of Part IXB. In
Article 243ZJ, a definite restriction has been imposed upon the State
Legislatures regarding fixation of maximum number of Directors of a Co-Operative
Society which shall not exceed twenty-one. Further, the State Legislatures have
been asked to provide for 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
or category of persons. Similarly, in sub-Article [2] of Article 243ZJ, the
duration of the term of office of the elected members of the board and its
office bearers has been fixed to be five years and in sub-Article (3) thereof, a
further direction has been given upon State Legislatures in the matter of
enacting law relating to Co-Operative Societies regarding co-option of the
member in the board of director and further provisions regarding the rights of
such co-opted members have also been made. Similarly in Article 243ZK, a further
condition has been imposed that 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. In Article 243ZL, a further
condition has been imposed that no board shall be suspended or kept under
suspension for a period exceeding six months and has also provided various
conditions under which a Board may be superseded or kept under suspension. In
Article 243ZM, it is mandatorily prescribed that the account of every society
should be audited within six months from the close of the financial year to
which the accounts relate. Article 243ZP casts a duty upon the society to file
return within the period fixed there in and there is no scope of ignoring the
same. Article 243ZQ prescribes the acts which would be the offences relating to
the co-operative societies and the State Legislature cannot deviate from those
mandates.
12. If
this Part IXB was not incorporated, the State Legislatures would have the
absolute right to enact law on the above subjects according to the decision of
such Legislatures whereas after the amendment, no option is given to the State
Legislature to deviate from or ignore those provisions. Thus, by incorporation
of Part IXB, various restrictions have been imposed relating to laws of
Co-Operative Societies which have constrained the jurisdiction of the State
Legislatures to enact any law relating to Co-operative Societies on those
aspects. In other words, in spite of the fact that the law relating to
Co-Operative Societies is still in the List II of the 7th Schedule,
without bringing the subject of Co-Operative Societies either into List I or
List III, by way of this amendment, the Parliament has controlled the said power
without complying with the provisions of Article 368 (2) of the Constitution by
taking ratification of the majority of the State Legislatures. The object
achieved by the amendment by way of incorporation of Part IXB could be easily
achieved by bringing the subject of Co-Operative Societies in LIST 1 UNION LIST
or LIST III-CONCURRENT LIST but in that case, there would have been the
necessity of such amendment being required to be 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 voting the amendment
and such amendment being required 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. By way of the impugned amendment, instead of taking
consent of the majority of the State Legislatures, by merely taking consent of
the Ministers of the State, the purpose has been sought to be achieved.
13. In
other words, what could not be achieved except by complying with the provisions
of Article 368 (2) of the Constitution, the selfsame purpose has been sought to
be achieved by the amendment impugned in this writ-application without complying
with the provisions of Article 368 (2) of the Constitution.
14. In
the case of Builders Association of India & others etc.etc. v. Union of India
and others etc.etc., reported in AIR 1989 SC 1371, a Constitutional Bench [five
judges] of the Supreme Court was considering whether the Constitution [46th
Amendment] Act, 1982 was passed after proper ratification as required under
Article 368[2] and whether the State was bound to follow Article 286 and Central
Sales Tax Act while levying tax under Article 366. In the said case, in Schedule
VII List II Entry No. 54, the scope was expanded. The plenary power of the State
government was expanded by interfering with its exclusive power under Article
246 by the said amendment. The Supreme Court, for the purpose of considering the
question inquired whether ratification process of Article 368[2] was complied
with and thereafter, upheld the validity. In this connection, we may profitably
record the following observation of the Supreme Court appearing in para-29 at
page 1386:
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 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 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 46 th Amendment had been duly
ratified by the required number of States.
14.1
By relying upon the aforesaid decision, Mr. Shah impressed upon us that whenever
even the case of expansion of scope of a particular entry in the list is taken
up for consideration, it is the duty of the Constitution Court to see that the
constitutional procedures for ratification in Article 368[2] are complied with
and according to him, in the case before us, the scope of Entry No. 32 of List
II having been restricted by interfering with its exclusive power under Article
246 and ratification procedure prescribed in Article 368[2] not having been
complied with, 97th Amendment is unconstitutional. We find that Mr. Shah is
substantially correct in his submission.
15. In
the case of Kihoto Holohan v. Zachillhu and others, reported in 1992 Supp [2]
Supreme Court Cases 651, a five-judge-bench of the Supreme Court was considering
whether Schedule X introduced by Constitution [52nd Amendment] Act, 1985 was
constitutionally valid or not, inasmuch as para-7 of the Schedule X took away
the powers of judicial review. It appears from the said judgment that one of the
questions raised before the Supreme Court was, having regard to the legislative
history and evolution of the principles underlying the Tenth Schedule, Paragraph
7 thereof in terms and in effect, brought 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 attracted the 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. Ultimately, in
para-62 of the judgment the Supreme Court made the following observations:
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 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:
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 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.
15.1
By relying upon the aforesaid decision, Mr. Shah rightly submitted before us
that although in the said case, in effect, there was no change in the language
of the articles mentioned in Clauses [a] to [e], even then, ratification
envisaged under Article 368[2] proviso was required to be complied with.
16. In
the case of S.R. Bommai and others v. Union of India and others, reported in
[1994] 3 SCC 1, a nine-judge-bench of the Supreme Court was considering whether
the presidential proclamation under Article 356 of the Constitution was subject
to judicial review and if the answer was in affirmative, then, to what extent.
16.1
It appears that six different judgments were delivered. Pandian, J. was of the
view that it is subject to review but in rare cases. Ahmadi, J. was of the view
that only on the limited ground of mala fide and vires, the same can be subject
to judicial review. On the other hand, Verma and Dayal, JJ were of the view that
such interference should be very narrow. Sawant and Singh, JJ, however, held
that the entire judicial review was applicable. Ramaswamy J, on the other hand,
restricted His Lordships observations that on legal mala fide and high
irrationality, it can be reviewed and traditional parameters and proportionality
of judicial review was not applicable. Reddy and Agarwal, JJ were of the view
that it is entirely subject to judicial review.
16.2
By relying upon the above decision, Mr. Shah, in our opinion, was justified in
contending that we should interfere in these cases as the basic structure of
federalism which was the subject matter in the case of S.R. Bommai (supra), was
ignored.
17. In
the case of M. Nagaraj and others, v. Union of India and others, reported in
[2006] 8 SCC 212, challenge was whether Constitution [85th Amendment] Act, 2011
inserting Article 16[4A] was constitutionally valid. It appears that the Supreme
Court upheld the constitutional validity on the ground that it complied with
Width Test and the Test of Identity. By relying upon the said decision, Mr.
Shah, in our opinion, was right in submitting that constitutional amendment is
to be tested on its width and one has to examine the identity.
18. In
the case of I.R. Coelho [dead] by L.Rs. v. State of T.N., reported in [2007] 2
SCC 1, a nine-judge-bench of the Supreme Court, returned its unanimous verdict
through Sabharwal, CJI. In the said case, the question was whether the Laws
placed under Schedule IX inserted by Article 31B were immuned from the judicial
review. Sabharwal, CJI, answered the question by holding that it is not immuned
and was subject to judicial review. The observations made in para-151 at page
111 are quoted below:
151.
In conclusion, we hold that:
[i] A
law that abrogates or abridges rights guaranteed by Part III of the Constitution
may violate the basic structure doctrine or it may not. If former is the
consequence of the law, whether by amendment of any article of Part III or by an
insertion in the Ninth Schedule, such law will have to be invalidated in
exercise of judicial review power of the Court. The validity or invalidity would
be tested on the principles laid down in this judgment.
[ii]
The majority judgment in Kesavananda Bharati case read with Indira Gandhi case
requires the validity of each new constitutional amendment to be judged on its
own merits. The actual effect and impact of the law on the rights guaranteed
under Part III has to be taken into account for determining whether or not it
destroys basic structure. The impact test would determine the validity of the
challenge.
[iii]
All amendments to the Constitution made on or after 24-4-1973 by which the Ninth
Schedule is amended by inclusion of various laws therein shall have to be tested
on the touchstone of the basic or essential features of the Constitution as
reflected in Article 21 read with Article 14, Article 19, and the principles
underlying them. To put it differently even though an Act is put in the Ninth
Schedule by a constitutional amendment, its provisions would be open to attack
on the ground that they destroy or damage the basic structure if the fundamental
right or rights taken away or abrogated pertains or pertain to the basic
structure.
[iv]
Justification for conferring protection, not blanket protection, on the laws
included in the Ninth Schedule by constitutional amendments shall be a matter of
constitutional adjudication by examining the nature and extent of infraction of
a fundamental right by a statute, sought to be constitutionally protected, and
on the touchstone of the basic structure doctrine as reflected in Article 21
read with Article 14 and Article 19 by application of the rights test and the
essence of the right test taking the synoptic view of the articles in Part III
as held in Indira Gandhi case. Applying the above tests to the Ninth Schedule
laws, if the infraction affects the basic structure then such law[s] will not
get the protection of the Ninth Schedule.
This
is our answer to the question referred to us vide order dated 14-9-1999 in I.R.
Coelho v. State of T.N.
[v] If
the validity of any Ninth Schedule law was already been upheld by this Court, it
would not be open to challenge such law again on the principles declared by this
judgment. However, if a law held to be violative of any rights in Part III is
subsequently incorporated in the Ninth Schedule after 24-4-1973, such a
violation/infraction shall be open to challenge on the ground that it destroys
or damages the basic structure as indicated in Article 21 read with Article 14,
Article 19 and the principles underlying thereunder.
[vi]
Action taken and transaction finalized as a result of the impugned Acts shall
not be open to challenge.
18.1
By relying upon the said decision, Mr. Shah, in our view, was right in
submitting that the contention of Mr. Champaneri or Mr. Jani that we cannot look
into the question whether formalities of ratification have been complied with or
not or whether basic structure of the Constitution has been hit is not tenable.
19.
Mr. Shah also placed strong reliance upon the decision of the Supreme Court in
the case of D.C.
Wadhwa v. State of Bihar, reported
in [1987] 1 SCC 625. In the said decision, the question was whether by
promulgating the ordinances from time to time on a massive scale in a routine
manner under Article 213 by Governor and without replacing them by Act of
Legislature, the constitutional provisions were infringed. In this connection,
Mr. Shah strongly placed reliance upon para-7 at page 393 of the said decision,
wherein, it was observed by Bhagawati, CJI that a constitutional authority
cannot do indirectly what it is not permitted to directly. If there is a
constitutional provision inhibiting the constitutional authority from doing an
act, His Lordship proceeded, such provision cannot be allowed to be defeated by
adoption of any subterfuge and that it would be clearly a fraud on the
constitutional provision.
19.1
By relying upon the said decision, Mr. Shah strenuously contended that the
object of the amendment before us is to overcome the provision contained in
Article 368[2] by taking ratification of majority of the State Legislatures and
thus, we should strike down the said provision.
20. We
also find substance in the contentions of Mr. Shah that by the amendment
impugned in this writ-application, one of the basic structures of the
Constitution, viz. the principles of federalism has been affected. There is no
dispute that federalism is one of the basic structure of our Constitution. Once
the subject of Co-Operative Societies is in the List II of the 7th Schedule, by
depriving the State Legislatures of their free exercise of right to enact on the
said subject and by curtailment of their right over the subject matter to abide
by the newly enacted provision of the Constitution without following the
requirement of ratification as provided in Article 368(2), the doctrine of
federalism which is one of the basic features of the Constitution has been
infringed.
21. At
this stage, we may profitably refer to the following observations of the
nine-bench-decision of the Supreme Court in the case of I.R. Coelho [dead] by
L.Rs. v. State of T.N. (supra):-
By
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 the Parliament. It is on this premise that
clauses 4 and 5 inserted in Article 368 by 42nd Amendment were struck down in
Minerva Mills case.
22.
Thus, the amendment is violating the basic structure of the Constitution so long
as the subject of Co-Operative Societies is in the List II of the 7th
Schedule and at the same time, the provisions of Article 368(2) has not been
complied with. The Constitution has not permitted curtailment of the power of
the State Legislatures over the subject mentioned in List II without taking
recourse to Article 368 (2).
23. We
now propose to deal with the decisions cited by Mr. Champaneri, the learned
Assistant Solicitor General of India, appearing for the Union of India.
24. In
the case of Sasanka vs. Union of India reported in AIR 1981 SC 522, the question
that had arisen before a five-judge-bench of the Supreme Court was whether the
provisions of Chapter IIB of the West Bengal Land Reforms -Act, 1955 (Act X of
1956) inserted by the West Bengal Land Reforms (Amendment) Act, 1971
(President's Act III of 1971), and replaced by the West Bengal Land Reforms
(Amendment) Act, 1972 (Act XII of l972) with retrospective effect from February
12, 1971, which provide for a fixation of ceiling on agricultural holdings and
for matters ancillary thereto, were violative of the second provision to Art.
31A (1) of the Constitution. In that context, the Supreme Court in paragraph 35
of the judgment made the following observations upon which Mr. Champaneri has
placed strong reliance:
35. As
regards the submission that Parliament cannot in exercise of its constituent
power under Art. 368 validate a State law, it seems to us that the entire
submission proceeds on a misconception arising from failure to distinguish
between a law made in exercise of the legislative power and the law made in
exercise of the constituent power. When Art. 31-B was introduced in the
Constitution by the Constitution (First Amendment) Act 1951, it validated
retrospectively 13 Acts specified in the Ninth Schedule, which, but for this
provision, were liable to be impugned under Art. 13 (2).Article 31-B conferred
constitutional immunity to such laws (all being enactments of State
Legislatures) and Parliament alone could have done so by inserting the said
Article in the Constitution in exercise of its constituent power under Art. 368.
In substance and reality it was a constitutional device employed to protect
State laws from becoming void under Art. 13 (2). It will appear clear that the
language in Art. 31-B is virtually lifted from Art. 13 (1), and (2), while Art.
13 (2) invalidates legislation, which takes away or abridges the rights
conferred by Part III, Art. 31-B extends protective umbrella to such legislation
if it is included in Ninth Schedule and, therefore, the Courts will have no
power to go into the constitutionality of the enactment as included in the Ninth
Schedule except on the ground of want of legislative competence.
(Emphasis supplied by us).
24.1
As it appears from the portion highlighted by us, the question involved in that
matter regarding the validity of the State Laws included in the Ninth Schedule
cannot have any application to the facts of the present case. Regarding
constituent power under Article 368, we have already relied upon the
observations of the nine-bench-judgment of the Supreme Court in the case of I.R.
Coelho [dead] by L.Rs. v. State of T.N. (supra) holding that by addition of the
words 'constituent power' in Article 368, the amending body, namely, Parliament
does not become the original Constituent Assembly.
We,
thus, find that the above decision relied upon by Mr. Champaneri does not help
his client in any way.
25.
Mr. Champaneri also relied upon paragraphs 108 to 122 of the judgment of the
Supreme Court in the case of Ashoka
Kumar Thakur v. Union of India reported in (2008) 6 SCC 1.
In
those paragraphs, the Supreme Court dealt with the question whether the 93rd
amendment of the Constitution was against the basic structure of the
Constitution or not. By the Constitution [93rd amendment] Act, 2005, clause (5)
was added to Article 15 of the Constitution which is an enabling provisions
which states that nothing in Article 15 or in sub-clause (g) of Clause (I) of
Article 19 shall prevent the State from making any special provision, by law,
for the advancement of any socially and educationally backward classes of
citizens or for the Scheduled Castes or the Scheduled Tribes insofar as such
special provisions relate to their admission to the educational institutions
including private educational institutions, whether aided or unaided by the
State. In such a case it was held by the Supreme Court that the said amendment
does not violate the basic structure of the Constitution so far as it relates to
aided educational institutions. The Supreme Court further held that the question
whether reservation could be made for SCs, STs or SEBCs in private educational
institutions on the basis of the Constitution [93rd amendment] or
whether reservation could be given in such institutions or whether any such
legislation would be violative of Article 19(1)(g) or Article 14 of the
Constitution or whether the said amendment which enables the State Legislatures
or Parliament to make such legislation are all questions to be decided in a
properly constituted lis between the affected parties and others who support
such legislation.
25.1
As pointed out above, in dealing with a case where the Supreme Court was faced
with the question of reservation for SEBCs in central educational institutions,
the contention that an amendment that inserted a fundamental right is violative
of the basic structure of the Constitution was found to be untenable. We fail to
appreciate how the decision is relevant for our purpose where the question is
without taking recourse to the specific provision of Article 368(2) requiring
ratifications of the majority State Legislatures whether the power of the State
Legislature in enacting law relating to Co-operative Societies can be curtailed
by the Parliament. We have already pointed out that a constitutional authority
cannot do indirectly what it is not permitted to do directly.
26.
Thus, the decisions cited by Mr. Champaneri do not help his client.
27. We,
therefore, allow this Public Interest Litigation by declaring that the
Constitution [97th amendment] Act, 2011 inserting part IXB containing
Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking
recourse to Article 368(2) of the Constitution providing for ratification by the
majority of the State Legislatures. This order, however, will not affect other
parts of the Constitution [97th amendment] Act, 2011.
In the facts and circumstances, there will be no order as to costs.
(BHASKAR
BHATTACHARYA, CJ.)
(J.B.PARDIWALA,
J.)
mathew
FURTHER ORDER:
After
this judgment was pronounced, Mr. Champaneri, the learned Assistant Solicitor
General of India appearing on behalf of the Union of India prays for stay of
operation of our judgment.
In
view of what has been stated above, we find no reason to stay our judgment. The
prayer is refused. However, certified copy be given by 24th April
2013, if applied for.
(BHASKAR
BHATTACHARYA, CJ.)
(J.B.PARDIWALA,
J.)
