Cooperative Societies and the 97th Amendment Explained

The 97th Amendment is the Constitution (Ninety-seventh Amendment) Act 2011, which made the right to form cooperative societies a fundamental right under Article 19(1)(c), added a Directive Principle on cooperatives as Article 43B, and inserted a new Part IXB (Articles 243ZH to 243ZT) setting national standards for how cooperative societies are run. It received the President’s assent in January 2012 and came into force on 15 February 2012.

The amendment was meant to make cooperatives democratic, autonomous and professionally managed. In July 2021, however, the Supreme Court in Union of India v Rajendra N Shah struck down Part IXB as it applied to cooperative societies in the states, because the amendment had not been ratified by the state legislatures. Part IXB survives for multi-state cooperative societies and Union Territories, and the other changes remain in force. This explainer was last reviewed on 8 October 2026.

Key Takeaways

• The 97th Amendment, in force since 15 February 2012, amended Article 19(1)(c) of the Constitution so that forming cooperative societies became a fundamental right of Indian citizens.
• The 97th Amendment inserted Article 43B in the Directive Principles of State Policy, directing the State to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.
• The 97th Amendment added Part IXB, covering Articles 243ZH to 243ZT, which sets rules on the size, term and election of cooperative boards, their audit and supersession, and their general body meetings.
• In Union of India v Rajendra N Shah (2021), the Supreme Court held by a 2:1 majority that Part IXB is invalid for state cooperative societies because the amendment had not been ratified by half of the state legislatures as Article 368(2) requires.
• After the 2021 ruling, Part IXB continues to apply to multi-state cooperative societies and to Union Territories, while the fundamental right in Article 19(1)(c) and the Directive Principle in Article 43B remain unaffected.
• The Ministry of Cooperation was created by the Government of India in July 2021, two weeks before the ruling, to give cooperatives a dedicated administrative home at the Union level.

What is the 97th Amendment?

The 97th Amendment is the Constitution (Ninety-seventh Amendment) Act 2011, a constitutional change that gave cooperative societies a place in the Constitution of India for the first time. It was passed by Parliament in December 2011 and became effective in February 2012, within the year the United Nations had declared the International Year of Cooperatives (2012).

The need for the amendment came from the experience of the cooperative sector. Cooperatives in India, which run banks, dairies, sugar mills, credit societies, housing societies and farm supply networks, are among the largest member-owned institutions in the world. But the state laws governing them differed widely, and many boards were found to be controlled by political interests, with elections delayed and societies placed under the control of administrators for long periods.

The amendment aimed to fix this by giving cooperatives constitutional protection and a common set of democratic standards. It did so through three linked changes: a fundamental right, a directive principle and a new Part of the Constitution.

How did the amendment change Article 19(1)(c)?

The 97th Amendment changed Article 19(1)(c) by adding the words “co-operative societies” to the right of citizens to form associations or unions, so that forming a cooperative society became a fundamental right. Before the amendment, the clause protected only the right to form “associations or unions”.

The effect of the change is that every citizen can claim, as a fundamental right, the freedom to join with others to form a cooperative society. As with other rights in Article 19(1), the right is subject to reasonable restrictions that the State may impose in the interest of sovereignty and integrity of India or public order or morality, as listed in Article 19(4).

The change also strengthened the position of cooperatives against arbitrary state action. A law or executive order that interferes with the right to form a cooperative can now be challenged as a violation of a fundamental right, enforceable through the High Courts under Article 226 and the Supreme Court under Article 32.

Importantly, the Supreme Court’s 2021 ruling did not disturb this change. The amendment to Article 19(1)(c) remains part of the Constitution and continues to protect the right to form cooperative societies everywhere in India.

What does Article 43B say?

Article 43B is a Directive Principle of State Policy that directs the State to endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies. It was inserted by the 97th Amendment after Article 43A.

The four key ideas in Article 43B can be summarised as follows:

• Voluntary formation: membership of a cooperative should be by free choice and not by compulsion.
• Autonomous functioning: cooperatives should run their own affairs without undue government interference.
• Democratic control: the members, each with an equal say, should control the society through free elections.
• Professional management: boards and managers should have the skills and training needed to run complex businesses.

As a Directive Principle, Article 43B is not directly enforceable in a court of law, but it guides the legislatures and the government in making policy and laws. Along with the other Directive Principles in Part IV of the Constitution, it forms part of the vision of economic and social justice. Like Article 19(1)(c), it was not affected by the 2021 judgment.

What is Part IXB of the Constitution?

Part IXB of the Constitution, titled “The Co-operative Societies”, is a set of provisions in Articles 243ZH to 243ZT that lays down a uniform framework for how cooperative societies are constituted, governed and supervised. It was modelled on the earlier Parts IX and IXA, which deal with panchayats and municipalities.

The main provisions of Part IXB include the following.

The Part also allows the board to include two experts as co-opted directors, who do not have voting rights and do not count towards the maximum of 21 directors.

Why did the Supreme Court strike down Part IXB for state cooperatives?

The Supreme Court struck down Part IXB for state cooperative societies because the 97th Amendment affected the legislative power of the states over cooperatives but was not ratified by the legislatures of at least half of the states, as the proviso to Article 368(2) requires. The Court gave this ruling on 20 July 2021 in Union of India v Rajendra N Shah.

The reasoning rested on how the Constitution divides powers between the Union and the states. “Co-operative societies” appears in Entry 32 of the State List, List II, of the Seventh Schedule, so the states have the primary power to legislate on them. Amending the Constitution in a way that restricts that power is a change that affects the federal balance. Under the proviso to Article 368(2), such an amendment must be ratified by the legislatures of not less than half of the states before it is presented for the President’s assent.

The key steps in the case were:

1. Parliament passed the 97th Amendment in 2011 without seeking ratification from the states.
2. The Gujarat High Court, in 2013, held Part IXB to be invalid because ratification had not been obtained.
3. The Union of India appealed to the Supreme Court.
4. In July 2021, a three-judge Bench ruled by a 2:1 majority that Part IXB, as it applied to state cooperative societies, was unconstitutional for want of ratification.
5. The Court applied the doctrine of severability, which allows a court to remove only the invalid part of an amendment and keep the remainder in force.

The dissenting judge took a different view on the need for ratification, so the ruling was not unanimous. The decision remains a leading authority on the limits of Parliament’s power to amend the Constitution without involving the states.

What survives after the 2021 judgment?

After the 2021 judgment, the amendment to Article 19(1)(c), the Directive Principle in Article 43B and the application of Part IXB to multi-state cooperative societies and Union Territories remain in force. Only the application of Part IXB to cooperative societies governed by state laws was invalidated.

This outcome follows from the constitutional division of subjects. A multi-state cooperative society is a society whose objects and members are not confined to one state. Under Entry 44 of the Union List, Parliament has the power to legislate on corporations whose objects are not confined to one state, which is why the Multi-State Co-operative Societies Act 2002 is a central law. Union Territories are administered by the Union, so Parliament can legislate for them directly.

In practice, most cooperative societies in India are registered under state cooperative laws, so the day-to-day effect of the judgment is that the states, not the Constitution, determine most of the rules about board size, elections and supersession. States may still follow the standards of Part IXB voluntarily, and many state laws had already been amended to reflect them.

How does the Multi-State Co-operative Societies Act fit in?

The Multi-State Co-operative Societies Act 2002 is the central law that governs cooperatives with members or operations in more than one state, and it was the main place where the standards of Part IXB are given effect for the societies that remain covered. Parliament has amended it from time to time to strengthen its governance provisions.

A later amendment in 2023 introduced further reforms, including a Co-operative Election Authority for conducting board elections, a Cooperative Ombudsman for member complaints and measures for the rehabilitation of weak societies. These changes were intended to improve transparency and governance in the multi-state cooperative sector, and they apply only to multi-state societies.

Examples of multi-state cooperative societies include national-level federations and large banks and processing societies whose membership spans several states. State cooperatives, such as district dairy unions or local credit societies, continue to be governed by the registrar of cooperative societies in the relevant state.

What is the Ministry of Cooperation?

The Ministry of Cooperation is the Union Government ministry created in July 2021 to look after the cooperative sector, to promote the “cooperation among cooperatives” idea and to streamline laws and procedures for cooperatives. It was carved out of the Ministry of Agriculture and Farmers Welfare, which had previously handled cooperatives as part of its portfolio.

The ministry’s stated aims include:

• providing a separate administrative, legal and policy framework for strengthening the cooperative movement;
• helping cooperatives become real people-based, member-driven institutions;
• easing business for cooperatives and supporting the development of multi-state cooperative societies;
• deepening the reach of cooperatives in rural and agricultural activity, such as credit, marketing and processing.

The creation of a central ministry may seem to sit uneasily with the fact that cooperatives are a state subject. The Union’s role is therefore generally one of coordination, policy support, funding schemes and administration of multi-state societies, while state governments retain legislative and regulatory control over their own cooperatives. The ruling in Rajendra N Shah reinforced this division of roles.

Why does the 97th Amendment matter for federalism?

The 97th Amendment matters for federalism because it shows how constitutional amendment procedure protects the powers of the states. The Supreme Court’s ruling made clear that Parliament cannot, by its own vote alone, restrict a subject that the Constitution places in the State List.

Three lessons are often drawn from the episode:

• Ratification by at least half of the states is a mandatory requirement, not a formality, when an amendment affects the legislative powers of states.
• Courts can sever the invalid parts of an amendment and leave the rest intact.
• Uniform national standards on a state subject can be achieved either by amendment with ratification or through model laws and cooperation among states.

The amendment also illustrates the tension between the aims of reform and the structure of federalism. The reform goals, such as democratic elections, regular audits and limits on supersession, are widely supported, but the route chosen did not satisfy the constitutional procedure.

Bottom Line

The 97th Amendment gave cooperatives a constitutional footing by making their formation a fundamental right, adding Article 43B and creating Part IXB, but the Supreme Court’s 2021 decision limited Part IXB to multi-state societies and Union Territories because the states had not ratified it. The right to form a cooperative and the directive on cooperative autonomy remain intact. The creation of the Ministry of Cooperation in 2021 shows that the Union continues to take an active interest in the sector, within the limits set by the federal structure.

Frequently Asked Questions

What is the 97th Amendment of the Indian Constitution?

The 97th Amendment is the Constitution (Ninety-seventh Amendment) Act 2011, which made forming cooperative societies a fundamental right, added Article 43B and inserted Part IXB on cooperative societies. It came into force on 15 February 2012. Its aim was to make cooperatives democratic, autonomous and professionally managed.

Which article makes forming a cooperative society a fundamental right?

Article 19(1)(c) makes forming a cooperative society a fundamental right. The 97th Amendment added the words “co-operative societies” to the existing right to form associations or unions. The right remains subject to reasonable restrictions under Article 19(4).

What does Article 43B say about cooperative societies?

Article 43B directs the State to endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies. It is a Directive Principle, so it guides policy but cannot be enforced directly in court. It was inserted by the 97th Amendment.

Why did the Supreme Court strike down Part IXB for state cooperatives?

The Supreme Court struck it down because the amendment affected a State List subject but had not been ratified by half of the state legislatures as Article 368(2) requires. The ruling came in Union of India v Rajendra N Shah on 20 July 2021. The Court severed Part IXB as it applied to state cooperatives and left the rest of the amendment in place.

Does Part IXB still apply to any cooperatives?

Yes, Part IXB still applies to multi-state cooperative societies and to Union Territories. The Court’s decision invalidated it only for cooperative societies governed by state laws. Multi-state societies are regulated by the Multi-State Co-operative Societies Act 2002.

When was the Ministry of Cooperation created?

The Ministry of Cooperation was created in July 2021. It was carved out of the Ministry of Agriculture and Farmers Welfare to provide a separate administrative and policy framework for the cooperative sector. Cooperatives remain primarily a state subject, so state governments keep their legislative role.

{“@context”:”https://schema.org”,”@graph”:[{“@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”What is the 97th Amendment of the Indian Constitution?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The 97th Amendment is the Constitution (Ninety-seventh Amendment) Act 2011, which made forming cooperative societies a fundamental right, added Article 43B and inserted Part IXB on cooperative societies. It came into force on 15 February 2012. Its aim was to make cooperatives democratic, autonomous and professionally managed.”}},{“@type”:”Question”,”name”:”Which article makes forming a cooperative society a fundamental right?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Article 19(1)(c) makes forming a cooperative society a fundamental right. The 97th Amendment added the words “co-operative societies” to the existing right to form associations or unions. The right remains subject to reasonable restrictions under Article 19(4).”}},{“@type”:”Question”,”name”:”What does Article 43B say about cooperative societies?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Article 43B directs the State to endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies. It is a Directive Principle, so it guides policy but cannot be enforced directly in court. It was inserted by the 97th Amendment.”}},{“@type”:”Question”,”name”:”Why did the Supreme Court strike down Part IXB for state cooperatives?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Supreme Court struck it down because the amendment affected a State List subject but had not been ratified by half of the state legislatures as Article 368(2) requires. The ruling came in Union of India v Rajendra N Shah on 20 July 2021. The Court severed Part IXB as it applied to state cooperatives and left the rest of the amendment in place.”}},{“@type”:”Question”,”name”:”Does Part IXB still apply to any cooperatives?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Yes, Part IXB still applies to multi-state cooperative societies and to Union Territories. The Court’s decision invalidated it only for cooperative societies governed by state laws. Multi-state societies are regulated by the Multi-State Co-operative Societies Act 2002.”}},{“@type”:”Question”,”name”:”When was the Ministry of Cooperation created?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Ministry of Cooperation was created in July 2021. It was carved out of the Ministry of Agriculture and Farmers Welfare to provide a separate administrative and policy framework for the cooperative sector. Cooperatives remain primarily a state subject, so state governments keep their legislative role.”}}]}]}