While recasting the Union Council of Ministers on 7 July, Prime Minister Narendra Modi sprang a surprise by announcing the creation of a new ministry, the Union Ministry of Cooperation, with Home Minister Amit Shah as head. It was an attempt by the government to encroach on the powers of the States.

Cooperative societies as a subject matter belong wholly and exclusively to the State legislatures to legislate upon under Articles 246 and 247 of the Constitution. The Ministry of Cooperation, according to the government of India, would provide a separate administrative, legal and policy framework for strengthening the cooperative movement in the country.

Article 246(3) of the Constitution read with List ii of the 7th Schedule reflects an important constitutional principle that forms part of the basic structure that the Constitution is not unitary but quasi-federal in character. The BJP wanted total control of the cooperative movement across the country. That is why Mr Shah was put in charge of the Ministry of Cooperation as if his plate as Home Minister was not full already.

Maharashtra alone has more than 200,000 cooperatives with millions of members. All these cooperative societies have been governed by the Maharashtra Cooperative Societies Act, 1960. In 2002 both Houses of Parliament passed the Multi-State Cooperative Societies Act to regulate the function of cooperative societies functioning in more than one State by the Union government.

That the cooperative movement needs reforms and rejuvenation is acknowledged by all, but it cannot be ushered in by sacrificing the quasi-federal nature of the Constitution. A Supreme Court Bench of Justice RF Nariman, KM Joseph and BR Gavai last week put paid to the Union government’s takeover of cooperatives by striking down the provision of the Constitution (97th Amendment Act) to the extent it introduced Part IX B in the Constitution to deal with cooperative societies.

Though there is a tilt in favour of the Union vis-à-vis the State, within their own sphere the States have exclusive power to legislate on topics reserved to them, the Bench said. Referring to some earlier judgments on this doctrine, the Court observed there was no overlap so far as the subject of cooperative societies was concerned. When it comes to multi-State cooperative societies, the legislative power would remain with the Union as contained in Entry 44 of List 1.

The ruling assumes relevance in the context of speculation about the role and purpose of the newly created Union Ministry of Cooperation. The executive power of the Union government extends only to those matters with respect to which Parliament has power to make laws just as the executive power of the State government extends to those matters with respect to which the State legislatures have power to make laws.