TaxTMI 
TaxTMI 
2013 (4) TMI 972
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....te 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 "Cooperative 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 cons....
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....ructure" 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....
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....e 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 Kesavanand's 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 s....
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....urts 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 co....
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....nal 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 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 cooperative 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 th....
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....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 cooperative 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 t....
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....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 construe....
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....rt 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 (Fortysecond 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 aft....
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....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 pe....
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....e 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 onehalf 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 pu....
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.... 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 fivejudge-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 attra....
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....however, held that the entire judicial review was applicable. Ramaswamy J, on the other hand, restricted His Lordship's 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. Coel....
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....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 r....
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....-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 ....
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.... 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-benchjudgment 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....