97th Amendment Act, 2011, and Co-operative Societies (Part IXB, Articles 243ZH–243ZT)
Indian Polity › Local Government: Panchayats and Municipalities · Topic 23.11
The 97th Amendment Act, 2011 made forming co-operatives a Fundamental Right, added Article 43B and Part IX-B (Articles 243ZH to 243ZT) with board, election, audit and supersession norms, but the Supreme Court in 2021 held Part IX-B operative only for multi-state societies.
5 min read · UPSC Prelims · Polity · Local Government: Panchayats and Municipalities
At a Glance
- What it is Constitutional status for co-operative societies
- Articles Part IX-B, Articles 243ZH to 243ZT
- Three changes Fundamental right, Directive Principle, new Part
- Court ruling Part IX-B operative only for multi-state societies (2021)
- Exam link UPSC Prelims, Polity: Local Government: Panchayats and Municipalities
Where Does It Fit?
This is the last topic of the category on Local Government. The 97th Constitutional Amendment Act of 2011 gave constitutional status and protection to co-operative societies, a subject in Entry 32 of the State List, with the aim of democratic, professional and autonomous functioning.
Three Changes Made
- It made the right to form co-operative societies a Fundamental Right, by amending Article 19(1)(c).
- It added a new Directive Principle on the promotion of co-operative societies (Article 43B).
- It added a new Part IX-B, The Co-operative Societies, with Articles 243ZH to 243ZT.
Provisions of Part IX-B
| Subject | Provision |
|---|---|
| Incorporation | State legislature may provide for incorporation, regulation and winding up, based on voluntary formation, democratic member-control, member-economic participation and autonomous functioning |
| Board | Directors as the state law provides, but not more than twenty-one; one seat for SC/ST and two seats for women; five-year term; co-option of up to two experts without voting rights; functional directors excluded from the count |
| Elections | Before expiry of term so that the new board takes over immediately; superintendence by a body provided by the state legislature |
| Supersession | No board superseded or suspended for more than six months; grounds are persistent default, negligence, acts prejudicial to members, stalemate, or failure of election body; not for societies with no government shareholding, loan or guarantee |
| Audit | At least once a year by auditors from a panel approved by the state; within six months of year-end; apex society reports laid before the legislature |
| General body meeting | Annual meeting within six months of year-end |
| Information | Members have access to books, information and accounts |
| Returns | Filed within six months, with annual report, audited accounts, surplus plan, bye-law amendments, and election declaration |
| Offences and penalties | State law to make false returns, disobedience, non-payment of deducted amounts, withholding records and corrupt electoral practices offences |
| Multi-state societies | Provisions apply with Parliament, Central Act and Central Government in place of state equivalents |
| Union territories | Apply, but the President may exempt |
Co-operatives in the Constitutional Scheme
Co-operative societies are a subject in Entry 32 of the State List, so states have their own co-operative laws. The amendment therefore operates at the intersection of state powers and national concern for the sector. The Fundamental Right of association in Article 19(1)(c) now covers the right to form co-operative societies, and Article 43B directs the State to endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. The principles written into Part IX-B are voluntary formation, democratic member-control, member-economic participation and autonomous functioning.
Why the Amendment Was Made
The Government gave three reasons. The co-operative sector had contributed significantly to the national economy but showed weaknesses in safeguarding members’ interests; elections were postponed indefinitely and nominated office bearers or administrators remained in charge for long, reducing accountability. Co-operative societies is a State List subject, and the states had enacted laws, but the performance in qualitative terms was not up to the desired level, so a strong need was felt to amend the Constitution to keep co-operatives free from unnecessary outside interference and to ensure autonomous and democratic functioning. And the Central Government was committed to ensure that co-operatives function in a democratic, professional, autonomous and economically sound manner, with deterrents against violation.
Constitutional Validity
In the Rajendra Shah case (2013), the Gujarat High Court declared the 97th Amendment inserting Part IX-B ultra vires for want of the requisite ratification by the states under Article 368, since it touches a State List subject; the court held that the changes to Article 19(1)(c) and the new Article 43B were not affected. On the Union’s appeal, the Supreme Court in 2021 upheld the High Court’s judgment except to the extent of striking down the whole of Part IX-B, and declared that Part IX-B is operative only insofar as it concerns multi-state co-operative societies both within the states and in the Union territories. The ruling shows the federal limits on the amending power: a change affecting the State List subject needs ratification by half the states.
Why Is This Topic Important?
- Recent amendment Current-affairs link
- Court ruling Rajendra Shah and 2021 Supreme Court
- Three changes Standard question
What Came Next?
The next category covers the Anti-Defection Law, beginning with its origin in the 52nd Amendment.
Key People and Terms
- Co-operative society Member-owned voluntary body
- Part IX-B The Co-operative Societies
- Article 43B Directive Principle on co-operatives
- Multi-state society Operating across states
- Supersession Replacing the elected board
Exam Corner
Points to Remember
- 97th Amendment: 2011; Part IX-B, Articles 243ZH to 243ZT.
- Maximum 21 directors; term five years.
- Supersession not beyond six months.
- 2021: Part IX-B only for multi-state societies.
Do Not Confuse With
- Part IX, IX-A and IX-B Panchayats, municipalities, co-operatives
- Article 19(1)(c) and 43B Fundamental Right versus Directive Principle
- State and multi-state societies State law versus Parliament
Memory Hook
Right to form, duty to promote, a new Part: co-operatives in 2011, but only multi-state ones after 2021.
Mains Angle
Questions on this topic usually ask about cooperative federalism and ratification. Use these points to add depth.
- Autonomy of co-operatives Democratic control
- State subject Ratification needed
- Court ruling Part IX-B limited
- Accountability Elections and audit
A Question You May Face
An original practice question, not a past paper question.
“Discuss the provisions of the 97th Amendment and the judicial verdict on its validity.”
How to Answer
- Introduction Three changes.
- Part IX-B Provisions.
- Verdict Gujarat HC and SC.
- Conclusion Federal limit.
GS Relevance
Frequently Asked Questions
What did the 97th Amendment Act do?
The 97th Amendment Act of 2011 made the right to form co-operative societies a Fundamental Right, added Article 43B as a Directive Principle on promotion of co-operatives, and inserted Part IX-B with Articles 243ZH to 243ZT on co-operative societies.
What is the maximum number of directors in a co-operative society?
The board shall have the number of directors provided by the state legislature but not more than twenty-one, with one seat for SC or ST and two for women, a five-year term, and up to two co-opted experts without voting rights.
For how long can a board be superseded?
No board shall be superseded or kept under suspension for a period exceeding six months. Grounds include persistent default, negligence, acts prejudicial to members, a stalemate, and failure of the election body to hold elections.
What did the Rajendra Shah case decide?
The Gujarat High Court held in 2013 that Part IX-B was ultra vires for want of ratification by the states under Article 368, while the changes to Article 19(1)(c) and Article 43B remained unaffected. The ruling was later reviewed by the Supreme Court in 2021.
What did the Supreme Court decide in 2021?
The Supreme Court upheld the Gujarat High Court except that it did not strike down the whole of Part IX-B, and declared Part IX-B operative only for multi-state co-operative societies, both in states and Union territories.
PYQ Practice — Statement Analysis
1 The 97th Amendment added Part IX-B.
On co-operative societies.
2 The maximum number of directors in a co-operative society is 31.
21.
3 Part IX-B applies to all co-operative societies after the 2021 ruling.
Only multi-state ones.
4 Article 43B is a Directive Principle on co-operatives.
Added in 2011.
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