Constitutional Status of Co-operative Societies

Cooperative societies status in the Indian Constitution changed fundamentally with the Constitution (Ninety-seventh Amendment) Act, 2011, which lifted cooperative societies out of being a purely state-regulated subject and gave them explicit constitutional backing. The amendment inserted a fundamental right to form cooperative societies, added a new Directive Principle directing the State to promote them, and created a wholly new Part IXB laying down a uniform constitutional framework that state laws on cooperatives must follow. The change makes this topic a useful reference point for questions on cooperative federalism, the local-government amendment model, and the limits of Parliament's amending power under Article 368.

From an Ordinary State Subject to Constitutional Recognition

Before 2011, cooperative societies were governed purely by State law, since the subject falls within List II (State List) of the Seventh Schedule. Each state framed and administered its own cooperative societies act, and state governments enjoyed wide discretion — including the power to supersede elected boards of cooperative societies or delay their elections, often for long periods, with no uniform constitutional check.

Parliament passed the Constitution (Ninety-seventh Amendment) Act, 2011 with the stated objective of promoting voluntary formation, autonomous functioning, democratic member-control and professional management of cooperative societies. The Amendment came into force on 15 February 2012 and made three simultaneous changes to the constitutional text.

Three Changes Made by the 97th Amendment

In method, this mirrors the 73rd Amendment Act, 1992, which inserted Part IX and the Eleventh Schedule for panchayats, and the 74th Amendment Act, 1992, which inserted Part IX-A and the Twelfth Schedule for municipalities. Both of those amendments similarly converted a body of local self-government from a subject left entirely to state discretion into one carrying constitutional protection.

Part IXB: The Constitutional Framework for Cooperatives

Part IXB does not itself enact cooperative law; it constrains how State Legislatures may frame such law. Article 243ZI permits a State Legislature to make law on the incorporation, regulation and winding up of cooperative societies, but only on the basis of "voluntary formation, democratic member-control, member-economic participation and autonomous functioning," and subject to the rest of Part IXB.

The Federalism Objection

Because cooperative societies remain a subject in List II of the Seventh Schedule, the Amendment attracted criticism on federalism grounds. Critics argued that by writing detailed, mandatory conditions — such as the 21-director cap, the six-month audit deadline, and the six-month/one-year supersession limit — directly into the Constitution, Parliament had curtailed the States' otherwise unfettered legislative freedom on a subject reserved to them under the State List, without following the special ratification procedure in Article 368(2). That clause requires any constitutional amendment that touches the distribution of legislative powers between the Union and the States to be ratified by the Legislatures of not less than one-half of the States before presidential assent. Since the 97th Amendment was enacted without such state ratification, its constitutional validity was contested. A public interest litigation was filed before the Gujarat High Court in 2012, seeking a declaration that the Constitution (Ninety-seventh Amendment) Act, 2011 was ultra vires the Constitution on this ground.

UPSC Relevance

Prelims

• The Constitution (97th Amendment) Act, 2011 came into force on 15 February 2012.
• Article 19(1)(c) makes the right to form cooperative societies a Fundamental Right.
• Article 43B (Part IV) is the Directive Principle on promotion of cooperative societies.
• Part IXB comprises Articles 243ZH to 243ZT.
• Article 243ZJ caps the maximum number of directors on a cooperative board at 21.
• Article 243ZL limits board supersession/suspension to six months (one year for non-multi-State banking cooperatives).

Mains

• Examine how the Constitution (97th Amendment) Act, 2011 extends the constitutional-protection model used for panchayats (73rd Amendment) and municipalities (74th Amendment) to cooperative societies.
• Discuss the federalism concerns raised against the 97th Amendment, given that cooperative societies remain a State List subject and the Amendment was not ratified under Article 368(2).

FAQ

Q1. Which amendment gave cooperative societies constitutional status? The Constitution (Ninety-seventh Amendment) Act, 2011, which came into force on 15 February 2012.

Q2. What Fundamental Right relates to cooperative societies? Article 19(1)(c), which includes the right to form cooperative societies alongside the pre-existing right to form associations and unions.

Q3. Which Directive Principle deals with cooperative societies? Article 43B, inserted in Part IV, directs the State to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.

Q4. What does Part IXB of the Constitution contain? Articles 243ZH to 243ZT, laying down constitutional requirements for incorporation, board composition, elections, supersession, audit, returns and offences relating to cooperative societies, which State laws on the subject must follow.

Q5. Why was the 97th Amendment challenged in court? Because cooperative societies are a List II (State List) subject, and critics argued that Part IXB restricted State legislative freedom on that subject without the ratification by State Legislatures required under Article 368(2) for amendments touching Union-State legislative distribution. A PIL on this ground was filed before the Gujarat High Court in 2012.

Quick Revision

• Constitution (97th Amendment) Act, 2011 → gave cooperative societies constitutional status; in force from 15 February 2012.
• Article 19(1)(c) → Fundamental Right to form cooperative societies.
• Article 43B (Part IV) → Directive Principle promoting cooperative societies.
• Part IXB → Articles 243ZH to 243ZT.
• Article 243ZJ → maximum 21 directors on a cooperative board.
• Article 243ZL → supersession/suspension capped at six months (one year for non-multi-State banking cooperatives).
• Article 243ZM → accounts audited within six months of the financial year's close.
• Federalism challenge: cooperative societies remain in List II; 97th Amendment not ratified under Article 368(2); PIL filed in Gujarat High Court, 2012.

Sources

• The Constitution of India — official text, Ministry of Law and Justice
• The Constitution (Amendment) Acts — legislative.gov.in

Further Reference

For deeper reading on this topic and the wider polity syllabus, these standard works are recommended:

• M. Laxmikanth, Indian Polity (McGraw Hill) — the standard UPSC handbook.
• D.D. Basu, Introduction to the Constitution of India (LexisNexis) — authoritative constitutional-law treatment.
• The Constitution of India — Bare Act — the official text.

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